The African Continental Free Trade Area (AfCFTA) and non-tariff barriers (NTBs)
Willemien Viljoen, tralac Researcher, discusses how the AfCFTA can help address the challenge of non-tariff barriers faced by African traders
Non-tariff barriers are some of the most prolific barriers to intra-Africa trade. If the AfCFTA is successful in addressing these barriers, significant progress can be made to increase intra-Africa trade – facilitating trade by limiting the number of barriers traders face when goods move across borders.
The barriers plaguing intra-Africa trade are mostly of a regulatory nature and include customs operations and border documentation requirements, rules of origin documentation, pre-shipment inspections, sanitary and phytosanitary measures (SPS) and Technical Barriers to Trade (TBTs). Although the negative impact of these measures on intra-regional trade have been recognised, thus far regional economic communities (RECs) have achieved limited success to address them.
Some of the challenges that the RECs face in their efforts to address NTBs include:
Overlapping membership: Member states (MS) often belong to more than one REC with different regulatory requirements. MS are often unable to reconcile the different requirements leaving traders with regulatory uncertainty.
Slow implementation of existing commitments related to trade facilitation measures, including the harmonisation and coordination of SPS measures, health certification, border operating times, customs documentation requirements and transit traffic. Implementation is hampered to a certain extent by overlapping membership.
Lack of transparency: Regulatory transparency and access to information are significant barriers to intra-Africa trade. Regulations and import requirements are often changed without advanced notice. Trade rules and requirements and subsequent changes are often not readily accessible, making it difficult and costly to trade across borders.
Lack of trust, especially related to the quality of imported goods, has increased with more stringent SPS requirements and standards, including additional testing requirements and pre-shipment inspections. This makes intra-Africa trade more time-consuming and costly. The lack of trust often relates to the lack of implementation of existing REC commitments (like the harmonisation of health certification and requirements) due to infrastructure deficiencies and human and financial constraints.
How can the AfCFTA overcome these challenges to reduce barriers faced by African traders?
It is important the relationship between infrastructure development, trade facilitation and NTBs be recognised. There is an inherent interdependence among trade facilitation, customs cooperation, transit, SPS and TBT commitments and the ability to limit NTBs to trade. AfCFTA commitments that will ensure harmonised and coordinated trade rules and requirements across the 55 African countries can go a long way to simplify intra-Africa trade and develop certainty and trust in the rules of the trade game. However, this is contingent upon effective implementation of these commitments. A lack of implementation will perpetuate ongoing uncertainty and recurring NTBs. An associated challenge is the co-existence of RECs with the AfCFTA. This means that mutual recognition, equivalence and coordination, where the harmonisation of rules and regulations is not possible, is important.
Furthermore, the AfCFTA needs to be complementary to other African Union initiatives, including the Action Plan for Boosting Intra-Africa Trade (BIAT) and Program for Infrastructural Development of Africa (PIDA). Transboundary, transnational and trade-related infrastructure development, together with trade facilitation measures and access to trade information can reduce market access constraints and increase continental trade liberalisation benefits. By providing certainty and transparency, the AfCFTA can contribute to reduce NTBs. Harmonised or similar trade rules that are readily available to producers and traders can reduce the overall cost of doing business in the region enabling small and medium enterprises to access new markets and trade across borders competitively.