Tag / Trade Barriers

by Mike Poverello

AU – Online tool to remove Trade Barriers in Africa goes live

An online platform developed by UNCTAD and the African Union to help remove non-tariff barriers to trade in Africa became operational on 13 January.

Traders and businesses moving goods across the continent can now instantly report the challenges they encounter, such as quotas, excessive import documents or unjustified packaging requirements.

The tool, tradebarriers.africa, will help African governments monitor and eliminate such barriers, which slow the movement of goods and cost importers and exporters in the region billions annually.

An UNCTAD report shows that African countries could gain US$20 billion each year by tackling such barriers at the continental level – much more than the $3.6 billion they could pick up by eliminating tariffs.

“Non-tariff barriers are the main obstacles to trade between African countries,” said Pamela Coke-Hamilton, director of UNCTAD’s trade division.

“That’s why the success of the African Continental Free Trade Area depends in part on how well governments can track and remove them,” she said, referring to the agreement signed by African governments to create a single, continent-wide market for goods and services.

The AfCFTA, which entered into force in May 2019, is expected to boost intra-African trade, which at 16% is low compared to other regional blocs. For example, 68% of the European Union’s trade take place among EU nations. For the Asian region, the share is 60%.

The agreement requires member countries to remove tariffs on 90% of goods. But negotiators realized that non-tariff barriers must also be addressed and called for a reporting, monitoring and elimination mechanism.

The online platform built by UNCTAD and the African Union is a direct response to that demand.

Hands-on training

Complaints logged on the platform will be monitored by government officials in each nation and a special coordination unit that’s housed in the AfCFTA secretariat.

The unit will be responsible for verifying a complaint. Once verified, officials in the countries concerned will be tasked with addressing the issue within set timelines prescribed by the AfCFTA agreement.

Hands-on training

UNCTAD and the African Union trained 60 public officials and business representatives from across Africa on how to use the tool in December 2019 in Nairobi, Kenya.

They practiced logging and responding to complaints, in addition to learning more about non-tariff barriers and their effects on trade and business opportunities.

“The AfCFTA non-tariff barriers mechanism is a transparent tool that will help small businesses reach African markets,” said Ndah Ali Abu, a senior official at Nigeria’s trade ministry, who will manage complaints concerning Africa’s largest economy.

UNCTAD and the African Union first presented tradebarriers.africa in July 2019 during the launch of the AfCFTA’s operational phase at the 12th African Union Extraordinary Summit in Niamey, Niger.

Following the official presentation, they conducted multiple simulation exercises with business and government representatives to identify any possible operational challenges.

Lost in translation

One of the challenges was linguistic. Africa is home to more than 1,000 languages. So the person who logs a complaint may speak a different language from the official in charge of dealing with the issue.

Such would be the case, for example, if an English-speaking truck driver from Ghana logged a complaint about the number of import documents required to deliver Ghanaian cocoa to importers in Togo – a complaint that would be sent to French-speaking Togolese officials.

“For the online tool to be effective, communication must be instantaneous,” said Christian Knebel, an UNCTAD economist working on the project.

The solution, he said, was to add a plug-in to the online platform that automatically translates between Arabic, English, French, Portuguese and Swahili – languages that are widely spoken across the continent. More languages are being added.

UNCTAD’s work on the AfCFTA non-tariff barriers mechanism is funded by the German government.

Source: UNCTAG.ORG, 17 January 2020

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by Mike Poverello

Open Borders and Integrated Supply Chains break down Global Trade Barriers

East Asian economies have recorded marked improvements in their ability to enable trade, while traditional frontrunners Singapore and Hong Kong retain a clear lead at the top of the global rankings, according to the Global Enabling Trade Report 2012, released today by the World Economic Forum.

The report, which is published every two years, also confirms strong showings for Europe’s major economies, with Finland and the United Kingdom both advancing six places to 6th and 11th, respectively, and Germany and France remaining stable at 13th and 20. Other large economies fare less well: the US continues its decline to 23rd, as does China (56th) and India (100th). Among emerging economies, Turkey (62nd) and Mexico (65th) remain stable while Chile (14th), Saudi Arabia (27th) and South Africa (63rd) climb in the ranking. ASEAN members Thailand (57th), Indonesia (58th) and the Philippines (72nd) also improve. Perhaps the proponents of OSBPs and a BMA in South Africa have not read this or have deeper insight into the matter.

As well as ranking nations’ trade openness, the report finds that traditional notions of trade are increasingly outdated as global value chains require new measurements, policies and cooperation. The report also finds that security, quality and trade can be mutually reinforcing through supply chain integrity efforts, but a knowledge gap in identifying buyers remains an important barrier. The biennial report, covering 132 economies worldwide, measures the abilities of economies to enable trade and highlights areas where improvements are most needed. A widely used reference, it helps countries integrate global value chains and companies with their investment decisions.

At the core of the report is the Enabling Trade Index, which measures institutions, policies and services facilitating the free flow of goods over borders and to destination. It breaks the enablers into four issue areas: market access, border administration, transport and communications infrastructure, and business environment. The Index uses a combination of data from publicly available sources, as well as the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum with its network of partner research institutes and business organizations in the countries included in the report. The 2012 results demonstrate that the ASEAN Trade in Goods Agreement has facilitated trade since its entry into force in 2010. This year, the report also directly captures the most important obstacles to exporting and importing in each country, and notes the strong links between import and export success. Source: AllAfrica.com / WEF

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by Mike Poverello

World Customs Tariffs – post World War 1

I came across a document prepared by the Canadian Reconstruction Association titled – Tariff Policies Throughout the World – published in 1921. It comprises a survey of tariff legislation since the armistice (end of WW1), which shows that every important country in the world was protecting its own industries and striving to reduce its dependence upon outside sources of supply, and that “Protection” is established and accepted as the fiscal policy of the nations of the world more generally and firmly than ever before.

The story told by these tariff developments is absolutely one-sided, a world-wide resort to tariff protection, recognition of the value of industrial development and of the home market, and a general strengthening of protective systems.

Two significant statements by the governments of the day bear testimony to this fact. The Spanish Government summarized cogently the world tariff situation at the time: “Many countries have taken and are taking measures to prevent the invasion of their markets by foreign goods; tariff barriers are being raised and other restrictive measures adopted on all sides; the situation is developing towards a worldwide tariff war. The new customs tariff is an instrument prepared for use in a tariff war, if necessary.” Not less worthy of heeding is a statement issued by the Australian government: “customs duties which are not high enough to be effective are worse than useless.”

What a strange contrast to today’s circumstances where the WTO seeks at all costs to ensure the dismantling of all barriers – tariff and otherwise. Now read what things were like in our own backyard.

SOUTH AFRICA

Conditions during the war were, in effect, such as would have obtained under an almost prohibitive tariff and as a result the industries of South Africa experienced a tremendous development. The Minister of Finance in his budget speech in 1920, stated that no less than 2,000 new factories had been established in that Dominion since the fiscal year 1915-16, that in the past four years industrial production had increased 50% and that the country was advancing rapidly in the direction of becoming self-supporting in respect of all the necessaries of life. Protectionist sentiment in the Union is strong.

The budget introduced into the Union Parliament on April 15, 1921, provided for an increase of various customs duties, and the Government has announced its decision to appoint an Advisory Customs Tariff Board which will be called upon, among its other functions, to report on “what steps may be necessary to assist and develop the industries of the Union.”

Two recent developments indicate the attitude of South Africa in regard to protection and encouragement of domestic industries. In the Spring of 1921, in order to protect the shoe manufacturing industry of South Africa, principally against competition from the United Kingdom, the Government prohibited the importation of leather footwear, except under license, with the provision that licenses should be issued only for the importation of such shoes as the South African manufacturers were unable to produce. By a proclamation of May 11, 1921, the Government brought certain goods within the scope of the “dumping” clause of the Union customs tariff and the “dumping” duty has now been made applicable to wheat, flour, and wheat meal imported from Australia, the amount of such duty to equal the difference between the price at which these products are sold for home consumption in Australia and the price for which they were sold for export to South Africa, except that, as under the Canadian Customs Act, the special or dumping duty must not exceed 15 %.

The policy of the present South African Government (circa 1921) is frankly to enable South African industries to continue in operation, to encourage new manufacturing industries and the utilization of the resources of the Dominion, and to prevent the Union from becoming a dumping ground for other countries. While the question of revenue is being kept in mind, the maintenance of South African industries is regarded as still more important in the interests of the country as a whole. Source: Internet Archive