Agoa.info - African Growth and Opportunity Act
TRALAC - Trade Law Centre
You are here: Home/News/Article/Africa: Non-tariff barriers still impede continent's trade

Africa: Non-tariff barriers still impede continent's trade

Published date:
Tuesday, 05 February 2008

If a country wants to ensure meaningful market access to a foreign market it requires a reduction in all types of potential barriers to trade.

Recently, there has been a renewed use of import controls by industrialised nations, such as antidumping , phytosanitary, labour and environmental controls, and rules of origin. It seems African countries are increasingly suffering the effect of especially phytosanitary controls and quality standards.

This becomes an even greater problem if a country is dependent on one or two primary commodities for the bulk of its export earnings. One of the problems is that African countries have been unable to participate in drawing up standards and regulations to protect their industries. It is therefore important for exporters to look at the most important non-tariff barriers that confront developing countries such as SA.

Antidumping is one of the most utilised forms of non-tariff barriers, especially by industrialised countries. Antidumping measures are imposed on products sold abroad at less than the product's market value. The main problem with these measures is that the importing country should be able to demonstrate that such imports have caused material injury to the domestic producers.

From 1995-2004, there were 69 antidumping cases in Africa, of which 50 involved SA.

However, it should be noted that SA is also the only African country to bring any antidumping cases to the World Trade Organisation (WTO), mainly because other less developed countries in Africa do not have the institutional capacity and political strength to register cases at the WTO. Developing countries are six times more likely to be targeted by industrial countries than developed countries . SA should thus take care to avoid subsidised imports that could disrupt its own domestic markets.

Although governments are allowed to intervene on trade to protect human, animal or plant life or health, it is also accepted that this should not be used to discriminate against particular trading partners or as a disguised form of protectionism. Phytosanitary regulations can seriously constrain the export potential of a country.

An example is the European regulations on citrus black spot, which negatively affects South African citrus fruit exports. Although these spots merely influence the appearance of fruit and are harmless to consumers, they are used as a reason to decrease export volumes to Europe.

The World Bank has confirmed that SA has been exporting citrus fruits to Europe for more than 70 years without causing any serious health issues.

Rules of origin are another nontariff barrier. These entail obliging beneficiary countries to prove that a high percentage of the value-add has been created within the national borders, and as such restrict sourcing from third countries. This severely constrains the export capacity of countries dependent on manufacturing production inputs from other countries. The result is that they are less able to source competitive inputs to ensure increased demand for the final product.

Studies show that the benefits for Africa provided under the US African Growth and Opportunity Act (AGOA) could have been about five times greater if countries were not subjected to the restrictive rules of origin that were imposed.

Another concern about non-tariff barriers is whether minimum standards for labour markets should be included in trade rules. This includes wages, working hours and recognition of labour unions. A controversial point is the imposition of trade sanctions through the WTO on countries that violate international labour standards. For example, SA's exporters of citrus fruit are required to meet Eurecap requirements for services provided to workers, such as the availability of a portable toilet every 600m in orchards.

Although considerable progress has been made on reducing tariff barriers it does not mean that these barriers do not continue to impede exports. South African exporters should acquaint themselves with the most recent non-tariff barriers used by foreign countries and also align their company policies to ensure compliance and improve the potential of sound financial returns.

Prof André Jordaan is director of the Investment and Trade Policy Centre of the University of Pretoria. This article was co-written by researchers Riaan de Lange, Reyno Seymore and Chris Lotter.

You are here: Home/News/Article/Africa: Non-tariff barriers still impede continent's trade