Kenya has accused Uganda of violating the terms of a regional customs agreement that links the two countries with neighbouring Tanzania.
Kenya has a more developed industrial base than its neighbours
The row comes eight months after the three nations launched the union in an attempt to revive the old East African Community, which collapsed in 1977.
Under the agreement, Ugandan companies can import some Kenyan goods duty-free.
But Kenyan Trade Minister Mukhisa Kituyi said many names on Uganda's list of authorised importers were fake.
"More than 50% of the companies either did not exist, or if they existed, they did not do the things they were supposed to be doing," Mr Kituyi told a news conference in the Kenyan capital, Nairobi.
The deal to recreate the EAC was signed in March 2004, following six years of negotiations, and came into force at the start of this year.
The trading bloc was intended as a first step towards a common market of more than 90 million people and a combined GDP of $30bn (£16bn).
But the row between Kenya and Uganda is not the first dispute to cast a shadow over the pact.
Last week, Tanzania objected to Kenya's decision to abolish duties on most pharmaceutical products imported from outside the bloc, because of fears that the move would harm the EAC's own drugs companies.
Kenya's Mr Kutuyi said Tanzania could take its case to the EAC's Court of Justice if it felt the rules had been broken.
The member states hope the EAC will eventually lead to a common currency and a political federation.
Ultimate goals also include an East African central bank.