Sand in the Wheels: Non-tariff measures and regional integration in SADC by David Vanzetti, Ralf Peters and Christian Knebel
The Southern African Development Community (SADC) comprises 15 countries with the common objective of regional integration. Member countries have been successful in reducing tariffs since 2000, but intra-regional trade has not increased as expected. One likely reason is that significant non-tariff measures (NTMs) remain.
NTMs are policy measures, other than ordinary customs tariffs, that can potentially have an economic effect on international trade in goods, changing quantities traded, or prices or both.
The most common NTMs in SADC are sanitary and phyto-sanitary restrictions, certification procedures, quantity control measures, other technical regulations, government procurement, investment restrictions and intellectual property rights.
Some measures are legitimate, such as those relating to food safety and the introduction of invasive species, but other measures may be used to limit trade to protect domestic producers or trade restrictiveness unintentionally exceeds what is needed for the measure’s non-trade objectives.
It is relatively simple to list the numerous non-tariff measures, but assessing their impact is more difficult. Two methods involve trying to measure the effect on quantity using a gravity model or by looking at the gap between world and domestic prices.
Data on NTMs for the SADC region is incomplete and a greater effort at data collection is needed. However, to illustrate the methodology and potential impacts of reducing barriers, we assume SADC countries have similar NTMs as the average for Africa.
The impacts on trade, output, employment and incomes of reducing these barriers are assessed using a global general equilibrium model. Depending on the initial trade flows and the magnitude and scope for removing the trade distorting effects of non-tariff measures, the increases in national exports are up to 2.2 per cent. National output, employment and incomes will also increase in all SADC countries.