Topics publications: Trade Facilitation and Customs
Trade Briefs
Transport costs reforms in SADC: where are we and where are we going?
Logistics is important, both in its own right and as a factor that facilitates trade and development. The most recent South African Logistics Survey (CSIR, 2014) found that the industry was worth some R277 billion in 2013, comprising 12.8 percent of South Africa’s GDP. There does not appear to be a similar calculation for SADC as a whole.
It is possible to see the competitive development of SADC ports and corridors outside the established Durban-Gauteng axis as simply competing for a slice of this logistics market. The potential benefits delivered by such developments are much broader. Ports and corridors are part of the enabling environment. Once they are established and competitive they will facilitate economic activities that cannot even be imagined at this point. They are essential to the region’s integration project.
At the centre of this discussion must be the role of the Port of Durban and, behind it, the corridor running to SADC’s dominant economic region, Gauteng. Durban accounts for some 65% of South Africa’s container traffic, according to Transnet National Ports Authority (TNPA) and planning is being done to deal with a projected increase in volumes from 74 million tonnes to 175 million tonnes over 30 years. In the immediate future, container capacity is expected to increase from 3.2 million/year (2014) to 4.6 million in 2018.
It is well-known that Durban has a congestion problem especially in the back-of-port area. This congestion has been a factor in driving the development of rivals, especially the Port of Maputo in Mozambique. Maputo is geographically well-positioned to capture a portion of Gauteng’s traffic with the support of SADC’s flagship development corridor (the Maputo Development Corridor). However, Maputo has one major disadvantage: between it and the Gauteng market lies an international border compliance cost implications. Walvis Bay has an even bigger problem, being separated from Gauteng by two international borders and another country (Botswana).
Beyond Gauteng however lies the southern African region with its burgeoning markets and trade potential. Durban is not better positioned to service this market than rival SADC ports. To get goods from Durban, via Gauteng’s inland ports, into the African hinterland, it is necessary to navigate one of Africa’s most notorious border posts, Beit Bridge, between South Africa and Zimbabwe. This suggests that alternative logistics routes, terminating at ports like Walvis Bay, Lobito and Luanda, on southern Africa’s West coast, and Maputo, Beira, Nacala and Dar es Salaam (and possibly the Bagamoyo container port) on the east, have a window of opportunity. Some of the factors that affect costs – especially regulatory factors that increase costs, hassle and delays – on these corridors lie within the control of the national governments of SADC.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
The role of customs management in the facilitation of trade in the region
The role of customs in the 20th and 21st centuries has evolved in many respects. With the proliferation of regional trading arrangements (RTAs) whose main objective is to increase trade between the parties through elimination of tariff and non-tariff barriers to trade, the role of customs in trade facilitation has gained increasing prominence in most regional trade agendas. This is largely because it is a customs responsibility to implement the tariff liberalisation commitments under the RTAs.
Equally important is the undeniable fact that burdensome customs procedures have been cited as one of the huge non-tariff barriers (NTBs) to trade. In addition, customs cooperation is an important aspect in the successful implementation of RTAs. It is not surprising therefore that most preferential trade agreements now include provisions on customs in the areas of simplification and harmonisation of trade procedures, documentation and customs cooperation. In addition, most of the RTAs now contain specific provisions on trade facilitation; however, in most such RTAs the details on the specific measures for achievement of the facilitation are usually either sketchy or non-existent.
The Southern African Development Community (SADC) launched its free trade area (FTA) in 2008, in accordance with the provisions of the SADC Trade Protocol (STP) as a culmination of a process of progressive tariff phase-downs on originating goods that had begun in 2000. At the same time all forms of existing NTBs were to be eliminated with no new ones introduced. It is clear that while there has been significant success on removal of tariffs and on non-tariff barriers to trade, little progress has been made. The continued incidence of NTBs is a direct affront to efforts in the region to facilitate intraregional trade in accordance with the STP in fulfilment of the objectives of the SADC FTA, itself one of the key milestones of the SADC regional integration agenda.
Part Three of the STP provides for Customs Procedures that underpin the role of customs in the attainment of the objectives of the protocol. These procedures relate to rules of origin (Article 12), customs cooperation (Article 13), trade facilitation (Article 14) and transit trade (Article 15). In light of these articles, this paper seeks to explore:
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the general role of customs in regional trade
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key aspects of customs management in regional trade
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the role of customs in the implementation of the World Trade Organisation (WTO) Agreement on Trade Facilitation
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the role of customs in the 21st century and regional integration
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some of the challenges faced by customs administrations in the facilitation of regional trade.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
The Bali WTO Trade Facilitation Agreement: Implications for southern Africa
Trade facilitation referrs to the simplification, harmonisation, standardisation and modernisation of trade procedures. It encompasses policies designed to reduce trade transaction costs, at-the-border and behind-the-border policy reforms, customs and border procedures, and, more recently, border management improvement, institutional development, transit and regional facilitation, logistics services markets and gateway infrastructure, among other important elements.
In addition to its prominence on the multilateral trade front, trade facilitation has gained currency in all modern-day regional trading arrangements motivated by the pressing need to eliminate non-tariff barriers and unnecessary other non-tariff measures that impede trade growth.
Trade facilitation negotiations at the World Trade Organisation (WTO) began in 2004, the obvious aim being to conclude a multilateral agreement that would help ensure the smooth and unimpeded flow of goods trade among WTO members. The negotiations were protracted, culminating in the recent landndmark conclusion of the Trade Facilitation Agreement (TFA) at the Bali Ministerial Conference held in December 2013.
This was, no doubt, a huge milestone for the WTO. The Agreement is set to be put into proper legal text, and become the Trade Facilitation Agreement after its adoption at the forthcoming July 2014 General Council meeting. As claimed by the WTO, the Agreement will generate between $400 billion and $1 trillion in global trade.
For the southern African region, as is certainly the case with other developing and least developed regions, the question that now begs exploration is: What are the implications for the region of the newly adopted Agreement? This paper seeks to explore the implications to southern Africa of the conclusion of the Trade Facilitation Agreement, this also on the backdrop of the region’s current trade facilitation agenda. A few case studies will be used to highlight the nature and magnitude of some of the implications.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Study into the cooperation of border management agencies in Zimbabwe
Zimbabwe is a landlocked developing country with a population of 14 million, sharing common borders with Botswana, Mozambique, South Africa and Zambia. Zimbabwe has 14 border posts, varying in size in accordance with the volume of traffic passing through them. Beitbridge, the only border post with South Africa, is the largest and busiest, owing to the fact that it is the gateway to the sea for most countries along the North-South Corridor. Zimbabwe thus provides a critical trade link between several countries in the southern African regions. The need for the country, especially its border posts, to play a trade facilitative role can therefore not be overemphasised.
Trade facilitation has become an important issue on the multilateral, regional and Zimbabwean trade agendas, and with it, border management efficiency. Border management concerns the administration of borders. Border agencies are responsible for the processing of people and goods at points of entry and exit, as well as for the detection and regulation of people and goods attempting to cross borders illegally. Efficient border management requires the cooperation of all border management agencies and such cooperation can only be achieved if proper coordination mechanisms, legal framework and institutions are established.
This study explores how border agencies in Zimbabwe operate and cooperate in border management. The objectives of the study were to:
- Identify agencies involved in border management in Zimbabwe;
- Analyse the scope of their role/involvement in border management; and
- Review domestic policy and legislation (statutes of these agencies) specifically to identify the legal provisions that facilitate cooperation among them
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.
Trade Reports
Trade Facilitation in the COMESA-EAC-SADC Tripartite Free Trade Area
The COMESA-EAC-SADC Tripartite was created in 2006 to assist in the process of harmonising programmes and policies within and between the three Regional Economic Communities of COMESA, EAC and SADC and to advance the establishment of the African Economic Community. The three main pillars of the Tripartite strategy, as contained in the Vision and Strategy document that was endorsed at the second Tripartite Summit in June 2011 are Market Integration, Infrastructure Development and Industrial Development.
In the Tripartite region the costs of transport, in particular road transport (which accounts for about 95% of the volume of cargo transported in the region), is directly related to the time taken for the journey. The typical charge for a stationary truck is between US$200 to US$400 a day. Therefore, if a truck takes 3 days to clear a border (which is not excessive in the COMESA-EAC-SADC region) the transporter will pass on an additional cost of between US$600 to US$1,200 for the cost of the truck sitting idle at the border to the importer. This will, in turn, be passed on to the importer’s client and ultimately, to the consumer.
Until the underlying causes of these high costs of transport are addressed African countries will remain high-cost producers, with no major direct investments taking place in non-mineral sectors, restricted economic growth opportunities and slow progress made in poverty alleviation. An integral part of the Tripartite Free Trade Area is the design and implementation of a programme that is aimed at improving trade and transport measures and reducing non-tariff barriers to trade.
The aim of this paper is to describe the main components of the Tripartite trade facilitation and non-tariff barrier programmes and put these programmes into a regional and a multilateral context.
Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.