Barriers to trade and their impacts on transport and logistics in the advent of AFCFTA

The term barriers to trade can be defined as those militating factors that act as a disincentive for international or domestic trade to be carried out effectively and thereby increases the cost and time for trade activities to take place efficiently.

Conspicuously, trade barriers have hampered the growth of trade in Africa and this is a major reason for the low intrade system among African countries. Many sovereignties in Africa have been economically left behind as far as international trade is concerned and this could be attributed to the various forms of barriers to trade that are making them uncompetitive both domestically and globally.

This write-up, therefore, seeks to highlight some of the key taxonomy of barriers to trade and the advantages and disadvantages associated with them as well as its impact on transport and logistics in the advent of AFCFTA.

Types of barriers to trade

Trade barriers can be categorized into tariff and non-tariff barriers. Tariff barriers are those forms of trade barriers that come in the form of taxes being imposed on imported goods from other countries. If the level of tariffs imposed on the goods is very high, it could increase the cost of importing the goods into the domestic country. This action may subsequently act as a disincentive for foreign imports and could also hurt the prices of imported goods.

Producers who often import raw materials from other countries will produce at a higher cost which may affect their profit margins.

Non-tariff barriers to trade refer to those forms of trade barriers that come in other forms than tariffs. This includes import licensing, quotas, embargos, regulatory measures such as sanitary and phytosanitary measures, standard regulations, pre-shipment inspection, lack of quality or adequate infrastructure, provision of subsidies by national governments among others, and poor government policies that include rules of origin.

There also exist natural trade barriers which can be seen in the case of landlocked countries or lack of access to the sea or mountainous regions as well as unfavourable poor climatic conditions or lack of natural resources.

Impact of barriers to trade

There are some proponents or schools of thought which believe that barriers to trade in the form of tariffs or taxes levied on imported goods tend to offer some level of protection to domestic industrial firms especially if the domestic firm is at its infant stage of establishment. The reason is, for these domestic firms to grow and be able to compete effectively, there is the need for some level of tariffs to be imposed on imports; this would enable such domestic firms to be able to grow their capacity and expand sufficiently enough before they can be able to compete with the foreign goods.

However, the gains from such trade barriers are that domestic firms or producers can adjust accordingly in terms of their production, however, consumer sovereignty is limited as the cost of importing similar goods is much more expensive, thus, consumers are forced to purchase more of the domestic ones.

The growth of domestic firms implies expansion of the level of employment in the economy and an increment in the government tax revenue. Regulatory measures such as sanitary and phytosanitary measures help to regulate the type of goods coming into the country and are being enforced based on WTO agreements.

These measures are designed to ensure that human, plant, and animal health are protected but their application should not be discriminatory by member countries.

The above-mentioned measures, therefore act as barriers to trade as the products coming into the country should meet some technical specifications as well as be subjected to testing and conformity assessments before they are allowed entry into specific countries.

Import licensing may also come with bureaucratic processes which may involve long documentation procedures, this in a way increases the cost and time of effective trade practices. Embargoes imply that a country has placed a total ban on a particular kind of goods entering a country or exiting and this in a way restricts access to other markets. Such measures by the national government may be due to political or economic motives.

Poor infrastructure in the form of deteriorating road infrastructure, poor telecommunication networks, inappropriate transport networks, etc. tend to increase the cost and time of trading. Subsidies provided by the national government make the prices of exported goods cheaper than the foreign ones as this hinders or prohibits the importation of imported goods which find it difficult to compete with the subsidized products.

Potential gains of AFCTA on transportation and logistics

The net gains of AFCFTA will have manifestations in the transportation and logistics sector. The elimination of non-trade barriers while moving freight within the free trade area will help ease the burden on shippers and exporters in more than one way as regulatory costs and waiting times for transit goods will now be reduced.

This will have a positive impact on the pricing of commodities and boost consumption. The increment in consumption would consequently help expand the activities of manufacturers. This will help provide more opportunities for the logistics companies in Africa and would help enhance the production of efficient machines for manufacturers to augment their production and meet their ever-increasing demand.

The AFCFTA will help address issues of elimination of trade barriers as a result of improved transportation networks in the development of seamless rail and road infrastructure across the continent. Prudent modes of transportation would undoubtedly aid in the transportation of perishable shipments as there will be the need for the creation of warehouses and cold storage facilities to accommodate fast consumable products.

Recommendations and conclusions

Most economies in Africa are still not trading effectively due to these barriers that are very paramount in most geo-polities. It is in good faith to say that the emergence of the African Continental Free Trade Area has brought much optimism in ameliorating the plights of the African continent by way of liberalizing trade across member countries. However, boosting intra-African trade can never be realized to the optimum if these non-tariff barriers are not effectively addressed.

There is a need for national governments to display the political will to go by the agreements and protocols establishing Africa's free trade area. Non-tariff barriers require to be well harmonized among member countries.

Rules of origin should be strictly adhered to, and the application of the right tariffs by member countries as well as the provision of quality infrastructure across the entire continent should be the top priority to reap the full gains of institutionalization of AFCFTA.