The impact of non-tariff barriers on maize and beef trade in East Africa

Abstract

On March 2, 2004, the East African Community (EAC) member
states signed the protocol for the establishment of the East
African Community Customs Union, which commits them,
among others, to eliminate non-tariff barriers (NTBs) to
increase intraregional trade. However, several NTBs are still
applied by member states, raising concerns among policy
makers and the business community. There is, however, no
information about the magnitude of the impact of these
NTBs. This study identifies the existing NTBs on maize and
beef trade in East Africa and quantifies their impact on trade
and the welfare of EAC citizens using a Spatial Equilibrium
Model (SEM). Data on NTBs were collected from traders
and transporters of maize and beef cattle in East Africa. In
addition, the study found that the main types of NTBs within
the three founding members of the EAC (Kenya, Tanzania and
Uganda) are similar. They include administrative requirements
(mainly licenses, municipal and council permits), taxes/duties
(mainly excise and cess duty), roadblocks, customs barriers,
weighbridges, licensing, corruption (e.g., through bribes) and
transiting.
The results of the welfare analysis vary across the three
countries, but the net monetary gains are positive in all cases.
A complete abolishment or a reduction of the existing NTBs
in maize and beef trade increases intra-EAC maize and beef
trade flows, with Kenya importing more maize from both
Uganda and Tanzania, while Uganda’s beef exports to Kenya
and Tanzania increase. As a result, positive net welfare gains
are attained for the entire EAC maize and beef sub-sectors. In
all cases, those who gain from the proposed reductions in NTBs
can potentially compensate the losers, leading to potential
improvements in welfare. These findings give compelling
evidence in support of the elimination of NTBs within the EAC
customs union. The study recommends taking a regional approach to
eliminating the existing NTBs since they are similar across the
member countries and across commodities so as to exploit
economies of scale. Other policy recommendations include
streamlining of administrative procedures at border points to
improve efficiency, and speeding up the implementation of
procedures at point of origin and at the border points. Finally,
the study recommends the need to design and implement
monitoring systems to provide feedback to the relevant
authorities on the implementation of measures to remove
unnecessary barriers to trade within the EAC region.