The term Barriers to Trade can be defined as those militating factors that acts as a disincentive for international or domestic trade to be carried out effectively and thereby increases the cost and time for trade activities to take place efficiently.
Conspicuously, trade barriers have hampered growth of trade in Africa and this is a major reason for the low intrade system among African countries. Many sovereignties in Africa have been economically left behind as far as international trade is concerned and this could be attributed to the various forms of barriers to trade that is making them uncompetitive both domestically and globally.
This write-up therefore seeks to highlight on some of the key taxonomy of Barriers to Trade and the advantages and disadvantages associated with them as well as its impact on transport and logistics in the advent of AfCFTA.
TYPES OF BARRIERS TO TRADE
Barriers to trade can be categorised into Tariff and non-tariff Barriers. Tariff Barriers are those forms of trade barriers that comes in the form of taxes being imposed on imported goods from other countries. If the level of tariffs imposed on the goods are very high, it could increase the cost of importing the goods into the domestic country. This action may subsequently act as disincentive for foreign imports and could also have negative effect on the prices of the imported goods.
Producers who often import raw materials from other countries will produce at a higher cost and may affect their profit margins.
Non-tarriff Barriers to trade refers to those forms of trade barriers that comes in forms other than tariffs. This include import licensing, quotas, embargos, regulatory measures such as sanitary and phytosanitary measures, standard regulations, pre-shipment inspection, lack of quality or adequate infrastructure, provision of subsidies by national governments among others, poor government policies that includes rules of origin.
There also exist natural barriers to trade which can be seen in the case of landlocked countries or lack of access to the sea or mountainous regions as well as unfavourable poor climatic conditions or lack of natural resources.
IMPACT OF BARRIERS TO TRADE
There are some proponents or school of thought which believe that barriers to trade in the form of tariffs or taxes levied on the imported goods tend to offer some level of protection on domestic industrial firms especially if the domestic firm is at its infant stage of establishment. The reason is, in order for these domestic firms to grow and be able to compete effectively, there is the need for some level of tariffs to be imposed on imports; this would enable such domestic firms to be able to grow their capacity and expand sufficiently enough before they can be able to compete with the foreign goods.
However, the gains from such barriers to trade is that domestic firms or producers are able to adjust accordingly in terms of their production, however, consumer sovereignty is limited as cost of importing similar goods are much more expensive, thus, consumers are forced to purchase more of the domestic ones.
Growth of domestic firms implies expansion of the level of employment in the economy and increment in the government tax revenue. Regulatory measures such as sanitary and phyto-sanitary measures helps to regulate the type of goods coming into the country and are being enforced based on WTO agreements.
These measures are designed for the purpose of ensuring that human, plant and animal health are protected but its application should not be discriminatory by member countries.
The above mentioned measures, therefore act as barriers to trade as the products coming into the country should meet some technical specifications as well as being subjected to testing and conformity assessments before they are allowed entry into specific countries.
Import licensing may also come with bureaucratic processes which may involve long documentation procedures, this in a way increases the cost and time of effective trade practices. Embargoes implies that a country have placed a total ban on a particular kind of goods of entering into a country or exiting and this in a way restricts access to other markets. Such measures by the national government may be due to political or economic motives.
Poor infrastructure in the form of deteriorating road infrastructure, poor telecommunication networks, inappropriate transport networks, etc. tend to increase the cost and time of trading. Subsidies provided by national government makes the prices of exported goods cheaper than the foreign ones as this hinders or prohibits the importation of the imported like goods which find it difficult to compete with the subsidised products.
POTENTIAL GAINS OF AFCFTA ON THE TRANSPORTATION AND LOGISTICS
The net gains of AFCFTA will obviously have manifestations on the transportation and logistics sector. The elimination of non-trade barriers while moving freight within the free trade area will help ease the burden on shippers and exporters in more than one way as regulatory costs and waiting times for transit goods will now be reduced. This will have positive impact on the pricing of commodities and boost consumption. The increment in consumption would consequently help expand the activities of manufacturers. This will help provide more opportunities for the logistics companies in Africa and would definitely help enhance the production of efficient machines for manufactures to augment their production and meet their ever increasing demand.
The AFCFTA will help address issues of elimination of trade barriers as a result of improved transportation networks in the development of seamless rail and road infrastructure across the continent. Prudent modes of transportation would undoubtedly aid in the transportation of perishable shipments as there will be the need for the creation of warehouses and cold storage facilities to accommodate fast consumable products.
RECOMMENDATIONS AND CONCLUSIONS
Most economies in Africa are still not trading effectively due to these barriers that are very paramount in most geo-polities. It is in good faith to say that the emergence of the African Continental Free Trade Area has brought much optimism in ameliorating the plights of the African continent by way of liberalising trade across member countries, however boosting intra-African trade can never be realised to the optimum if these non-tariff barriers are not effectively addressed.
There is the need for national governments to display the political will to go by the agreements and protocols establishing Africa’s free trade area. Non-tariff barriers requires to be well harmonised among member countries. Rules of origin should be strictly adhered to, application of the right tariffs by member countries as well as provision of quality infrastructure across the entire continent should be the top priority in order to reap the full gains of institutionalisation of AfCFTA.
BY KING EFFAH – NKYI[The writer is a trade investigative officer, GITC-Accra]