Fifteen countries which are members of the Southern African Development Community
(SADC) have embarked on a regional integration initiative. In 1996, a trade protocol that
aimed to increase trade among members by removing trade barriers was signed. In the year
2000, this protocol was implemented, leading to a Free Trade Area (FTA) in 2008. More than
85 % of SADC trade was free of customs duties from 2008 onwards. However, while custom
tariffs were reduced, the share of SADC trade did not show any improvement over the tenyear
period after implementing the trade protocol. Accordingly, the objective of this study is
to examine the factors which contributed to lack of improvement in SADC trade, particularly
the role of Non-Tariff Measures (NTMs).
One of the main challenges in analysing NTMs in SADC is the unavailability of relevant
information. An SADC NTM database was built as a repository of official NTMs. In order to
quantify NTMs, a database was classified, similarly to the international database. Agricultural
products at HS 4-digit level for ten SADC countries were included in this repository, and
groupedinto six main categories; namely animal products, cereals, horticultural products,
oilseeds, industrial and processed products. The trade data challenges within SADC countries inadvertently prescribed the econometric
methods to apply for the set objectives of the study. The two main challenges of SADC trade
data are missing data for some years and high percentage of zero trade flows. A latent
threshold gravity model was employed with hierarchical specification to control for country
effects. The hierarchical model captures individual country effects, such as the impact of
NTMs on trade volumes, and thus intra-SADC trade.
Such impact was then assessed when an additional NTM is introduced or increases trade
volumes. The two effect models were examining the attributes of changes in regional trade, as
well as those attributes of change in NTMs. The effects NTMs were incorporated into the
model by weighting the number of NTMs by share of trade in the region, as well as ranks of
country NTMs within product groups. Types of NTMs which were estimated are Sanitary and
Phyto-Sanitary measures (SPS), Technical Barriers to Trade (TBT) and an aggregation of all
other NTMs which do not belong to the two groups. Results show that there is evidence NTMs were increasing at the same period when tariffs
were being reduced. Using the inventory methods of evaluating presence and prevalence of
NTMs, it was also evident that NTMs are used across most agricultural products. The
percentage of products affected by NTMs in 2010 was much higher than in 2000.
The econometric model results show that all gravity model variables, GDP, border and
language were consistent with the theoretical expectations.Distance does nothave significant
influence on SADC trade. The reason for this has to do with the trading pattern of SADC
countries, which is very high between contiguous members, compared to non-contiguous
members. The estimation of zero observed trade, using a threshold model, provided additional
understanding of the role and reasons for such trade. The estimated effects of the observed
zero trade showed that if this threshold is high, implying that trade costs (NTMs) are
restricting trade, then zero trade was observed. When high percentage of zero trade is
observed, then intra-SADC trade remains small or declines. However, if the threshold is low,
intra-SADC trade increases, as was observed in the case of industrial products.
The overall results confirm that NTMs do have an impact on intra-SADC trade. Industrial and
cereal products are more responsive to NTMs than the other five product groups. A unit
change in NTMs by regional trade members has more effects on intra- regional trade than a unit change in trade value. That is the case because the SADC is already exchanging a large
share of its total trade with non-SADC members. Therefore, attention should be given to
addressing the way NTMs are introduced.
One of the important findings from the study is that the intra-SADC trade is affected more by
the effect of an additional NTM, than an additional unit of trade in value. The effect of
addressing NTMs is one and half more than those of additional trade value. So, in order to
improve intra-SADC trade performance, focus must on addressing the NTMs and growing
trade. In addressing NTMs, it does not necessarily require removing or even reducing them. It
is about making it easy to comply with them. SADC trade can be improved substantially by
aiming to harmonise NTMs and overall policies. / Thesis (PhD)--University of Pretoria, 2014. / lk2014 / Agricultural Economics, Extension and Rural Development / PhD / unrestricted
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:up/oai:repository.up.ac.za:2263/43366 |
| Date | January 2014 |
| Creators | Kalaba, Mmatlou W. |
| Contributors | Kirsten, Johann F., mmatlou.kalaba@up.ac.za, Abidoye, Babatunde O. |
| Publisher | University of Pretoria |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
| Rights | © 2014 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. |
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