How Transaction-Level Customs Data Could Benefit the Cause of the AfCFTA
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The African Continental Free Trade Area (AfCFTA) holds much promise for the economic future of the African continent. This continent-wide free trade area aims not just to liberalise the overwhelming majority of intra-African trade, but also to forge agreement on trade in services, trade disputes, border management, digital trade and intra-African payments settlement. The implications are wide ranging, but what is certain is that real pecuniary and other gains await the countries of Africa should the agreement succeed in its goals.
Ultimately however, there is usually a gulf between the hype of international cooperation and the reality of the implementation of what are, in essence, complex and ground-breaking agreements. Although economic analysis tell us of a certainty that the net gains from deepening intra-African integration will be positive, an outcome that does not entail some adjustment pain is not possible. This is because tariff walls inevitably protect domestic industry from the rigours of international competition and their removal will expose certain uncompetitive industries and corporations to this competition, to their prejudice.
Secondly, tariffs provide revenue. According to the OECD, non-VAT consumption taxes (of which tariff revenue is the main source) in Africa are nearly double those for the OECD average. Due to the nature of their economies, African governments collect a far greater proportion of consumption taxes and corporate taxes than individual taxes and other tax types. The AfCFTA, with its goal of eliminating tariffs on 90% of goods, will involve the loss of a portion of tax revenue that has already seen reductions due to other trade liberalisation processes. An added complication is the impact that the Covid-19 pandemic has had on public finances worldwide. The contractions in business activity have led to negative shocks to tax revenues, while in many cases the demands on the fiscus have risen. Africa has not been spared of this crisis.
The upshot of this is that tariff liberalisation in the AfCFTA could be a protracted and at times difficult process. Progress needs to be monitored, and monitoring requires good research and information feedback. Good information and research needs to be based on good data, where ‘good’ is this respect means not only accurate, but also comprehensive and up to date data.
The primary source of global merchandise trade data is UN Comtrade. This data covers 200 reporting countries, 54 years and more than 6000 products. Comtrade data is also provided in other portals such as Trade Map, WITS (which also combines it with WTO tariff data) and UNCTAD Stat, among others. Comtrade data is disaggregated to the 8 digit level (tariff line), is available at a minimum time resolution of quarterly and (for imports data) contains the name of the origin country, as in the country from which the goods were shipped.
By contrast, transaction level data sourced from a commercial provider such as ImExDBusiness contains all of the above information plus the origin country (the country in which the imports were manufactured), the exporter and importer company names, the total taxes paid on the transaction (including sales taxes, duties, levies and surcharges) as well as product volume details such as weight, quantity and unit. In addition, since the data is per-transaction, the actual date of the transaction is included. There is no aggregation either by time period, product category or volume.
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