Trade and Commerce in the World
Senior 6 · Geography
Trade and Commerce in the World
Lesson 4 of 4
45 min
Figure 1 places the four organisations of this lesson side by side. Before reading the case studies, look for patterns: which is oldest, which have lost members, and which have kept growing?
Figure 1. Key dates of the EAC, ECOWAS, OPEC and the EU, 1950–2026. Drawn by Ganzaa.
| Organisation | Founded | Headquarters | Members (2026) | Stage or type |
|---|---|---|---|---|
| East African Community (EAC) | 1967; re-established by a treaty signed on 30 November 1999, in force 7 July 2000 | Arusha, Tanzania | 8 | Customs union and common market, aiming at monetary union and political federation |
| Economic Community of West African States (ECOWAS) | 28 May 1975 (Treaty of Lagos) | Abuja, Nigeria | 12 (15 until January 2025) | Free trade area with a common external tariff since 2015 |
| Organization of the Petroleum Exporting Countries (OPEC) | 14 September 1960, Baghdad | Vienna, Austria | 11 since 1 May 2026 | A producers' organisation (cartel) for one commodity, not a free trade area |
| European Union (EU) | 1957 as the European Economic Community; EU since 1 November 1993 | Brussels, Belgium | 27 | Economic and monetary union; the euro is used by 21 members |
Members: Burundi, the DR Congo, Kenya, Rwanda, Somalia, South Sudan, Tanzania and Uganda. Kenya, Tanzania and Uganda founded the first EAC in 1967; it collapsed in 1977. The three revived it in 2000; Rwanda and Burundi became full members on 1 July 2007, South Sudan joined in 2016, the DR Congo in 2022 and Somalia in 2024.
The four pillars, in order: a customs union (2005), a common market (2010), a monetary union (protocol signed 2013) and, finally, a political federation.
| Achievements | Problems |
|---|---|
| A common external tariff and duty-free trade in goods that meet EAC rules of origin | Non-tariff barriers: roadblocks, weighbridges, differing standards and delays |
| The Single Customs Territory: goods for Kigali are cleared once, at Mombasa or Dar es Salaam, not at every border | Disputes between members, such as the closure of the Gatuna (Katuna) border between Rwanda and Uganda from 2019 to 2022 |
| One-stop border posts, such as Rusumo between Rwanda and Tanzania, where both countries check travellers and goods in one place | Unequal gains: members with more industry, above all Kenya, sell far more to their partners than they buy from them; Rwanda's own figures below show the imbalance |
| Freer movement of people: some partner states accept national identity cards for travel; an East African passport | Overlapping membership of COMESA, SADC and ECCAS, with different rules |
| Shared institutions: the East African Legislative Assembly, the East African Court of Justice and the Lake Victoria Basin Commission | Partner states late in paying their contributions; insecurity in parts of the eastern DR Congo and Somalia |
| Joint transport corridors (Northern and Central) and planning of railways and power links | The monetary union has fallen behind its original timetable |
Rwanda's trade with its partners. NISR's figures for the fourth quarter of 2025 show how one-sided this trade is. Rwanda imported US$ 440.54 million of goods from its EAC partners (NISR's EAC group: Burundi, Kenya, South Sudan, Tanzania and Uganda; the DR Congo is reported separately), almost half of it from Tanzania, but sold them only US$ 27.04 million of domestic exports, 58% of that to Uganda.
Fifteen countries signed the Treaty of Lagos on 28 May 1975 to promote economic integration in West Africa. In January 2024 the military governments of Burkina Faso, Mali and Niger announced that they were leaving; their exit took effect on 29 January 2025, leaving 12 members, and the three formed their own Alliance of Sahel States.
Worked example: comparing two blocs
Problem. Explain why the EAC has kept gaining members while ECOWAS has lost three.
Solution. EAC: new members gain access to the sea through the Northern and Central Corridors, a larger market and a common external tariff that protects regional industry; the DR Congo and Somalia saw membership as a way to rebuild trade and security links with their neighbours. ECOWAS: the departures were mainly political. After coups, ECOWAS suspended Mali, Burkina Faso and Niger and, in Niger's case, imposed sanctions and threatened military action; the military governments answered by leaving. Judgement: economic integration depends on political agreement. A bloc that enforces democratic rules may lose members in the short run, while one that admits fragile states takes on their security problems. Both lessons show that trading blocs are political as well as economic.
Iran, Iraq, Kuwait, Saudi Arabia and Venezuela founded OPEC at Baghdad in September 1960 to take back control of oil prices from the large Western oil companies. Its aims are to coordinate the oil policies of members, secure fair and stable prices, give producers a steady income and supply consumers efficiently. Its main tool is the production quota: members agree how much each will pump, cutting output to raise prices or raising it to lower them.
Membership has shrunk. Qatar left in 2019, Ecuador in 2020 and Angola at the start of 2024. On 28 April 2026 the United Arab Emirates, then OPEC's third-largest producer, announced that it would leave from 1 May 2026, leaving 11 members: Algeria, the Republic of the Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia and Venezuela. The US Energy Information Administration (EIA, June 2026) estimates that OPEC with the UAE produced 35% of the world's crude oil in 2025, and 31% without it. Since 2016 OPEC has also coordinated output with other producers, including Russia, as OPEC+.
| Achievements | Problems |
|---|---|
| Members gained control of their own oil and its price; prices rose about fourfold in the 1973 crisis | Members exceed their quotas, which weakens price control |
| Oil income financed roads, schools, hospitals and cities in the Gulf states | Different needs: populous members such as Nigeria want high output now; small rich members can wait |
| The OPEC Fund for International Development lends to poorer countries | Wars between members (Iran and Iraq 1980–1988; Iraq's invasion of Kuwait in 1990) |
| A forum for producers and consumers to discuss supply | Competition from non-members (United States shale oil, Brazil, Norway) and members leaving |
| The long-term shift to renewable energy and electric vehicles |
The EU grew from the European Coal and Steel Community of 1951, formed by six countries (Belgium, France, West Germany, Italy, Luxembourg and the Netherlands) so that the coal and steel needed to make war were shared. The Treaty of Rome (25 March 1957) created the European Economic Community; the customs union was complete in 1968, the single market began on 1 January 1993, and the Maastricht Treaty created the European Union on 1 November 1993. The euro was launched in 1999, with notes and coins from 2002. The United Kingdom left on 31 January 2020, leaving 27 members, and Bulgaria became the 21st country to use the euro on 1 January 2026.
Warning
Common mistakes
CNBC International: "What is OPEC? | CNBC Explains" (2018). As you watch, note how quotas are meant to work and why members break them. The video is from 2018, so its list of members is out of date: Qatar, Ecuador, Angola and the UAE have since left.
Practice
Further reading
Sources and credits
Photos: East African Community heads of state (nukta77, CC BY-SA 2.0), Wien - OPEC-Zentrale (C. Stadler/Bwag, CC BY-SA 4.0) and Berlaymont, Brussels (EmDee, CC BY-SA 4.0), via Wikimedia Commons.
Video: "What is OPEC? | CNBC Explains", CNBC International, embedded from YouTube.
Figure 1, the worked example and the exercises were drawn and written by Ganzaa.
This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.
