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.

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Introduction

SADC comprises 15 countries with the common objective of regional integration. Most members eliminated or reduced their tariff barriers between the member countries by 2012. Compared with other regional economic communities in Africa, the share of intra-SADC trade at 10 per cent of the region’s total trade is relatively high, but this has not increased as the tariffs were reduced. Non-tariff barriers remain and their reduction or removal would make a significant contribution to trade within the region.

What are Non-Tariff Measures?

Non-tariff measures (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. NTMs may be legitimate, relating for example to food safety. Non-tariff barriers (NTBs), as distinct from non-tariff measures, refer to impediments that are designed to restrict trade for the benefit of domestic producers. NTBs may take the form of import quotas, subsidies, customs delays, technical barriers, or other systems preventing or impeding trade.

The UNCTAD MAST classification of NTMs is useful in assisting transparency. The distinctly neutral definition of NTMs does not imply a direction of impact nor a judgement about the legitimacy of a measure.

It notably comprises Sanitary and Phytosanitary (SPS) measures and Technical Barriers to Trade (TBT), which primarily have important objectives related to health and environmental protection and which may equally apply to domestic producers. Requirements include tolerance limits for additives or contaminants, quarantine requirements to eliminate pests, performance requirements and conformity assessments such as inspection or certification. These measures are referred to as “technical measures”, as they define mandatory product characteristics rather than taking a quantitative or price-based approach. Technical measures still have an impact on trade and can become substantial barriers. Furthermore, the application can be abused to protect the local industry from competitive imports. SPS measures require ‘scientific justification', according to WTO regulations, but this is somewhat subjective.

Countries are usually setting their own standards for SPS according to their particular environment. This leads to many disputes.

“Non-technical” measures comprise the instruments of trade policy that specifically aim to change quantities or prices of imported goods, such as quotas, price controls or contingent trade-protective measures (anti-dumping, safeguard and countervailing duties). These measures are often termed NTBs due to their unequivocally discriminatory and protective nature.

SADC NTMs

The most common NTMs in SADC are sanitary and phyto-sanitary restrictions (SPS), nonautomatic licensing requirements, export restrictions and technical regulations, according to Kalaba and Kirsten (2012) (see figure 1). Most of the SPS measures apply to agricultural products. In terms of products, the most common application of NTMs appears to be to fruits (over 400 measures), meat (over 250), and dairy products (over 200). Fruits are prone to be carrying insects such as fruit fly whereas meat and dairy products can contain bacteria (e.g. salmonella and listeria) that are dangerous to human health. In addition, food can also contain contaminants such as lead, mercury or pesticides. There are also a large number of measures applying to livestock. These are to restrict the spread of debilitating diseases, such as Foot and Mouth Disease in cattle or the spotted stemborer (Chilo sacchariphagus) in sugar cane. Hence, it is obvious that the appropriate applications of NTMs have significant benefits.

The SADC region was scheduled to develop a Customs Union by 2010, but this has not yet occurred. The next step, a SADC common market, is one of the primary objectives. A common market would remove the need for internal border controls, the source of many complaints impeding trade. The most common complaints when crossing borders include unrecorded fees (bribes) and the discriminatory application of regulations regarding weights and measures on roads.3 Other complaints relate to labelling and standards. Angola requires for example that all imports into the country are labelled in Portuguese. Other examples include a ban in Zambia on dairy imports from neighbouring countries, and a requirement that sugar imports be fortified with Vitamin A.

There is not much trade between SADC members. It is possible that the reason the shares of trade between members is low is because the NTMs are prohibitive or very restrictive, and removing them may increase trade greatly. However, in computable general equilibrium models, low levels of initial trade may imply that reducing NTMs will little impact on trade, particularly if the ad valorem equivalent of the NTMs is in the order of 10-20 per cent.

SADC tariffs have practically been eliminated with the exception of Zimbabwe, Angola and Democratic Republic of the Congo. Zimbabwe has an average tariff of around 16 per cent on imports from South Africa. However, the share of intra-regional trade has not increased in proportion as the tariff have been reduced. It is currently around 10 per cent. An obvious candidate restricting trade is NTMs.