Trade and Industry

Monday, 01 December 2003

Non Tariff Measures (NTMs) Facing Exports from South and Southern Africa

  • Year: 2003
  • Organisation: TIPS
  • Author(s): Ron Sandrey
  • Countries and Regions: South Africa, Southern African Development Community (SADC)

As international tariffs are being reduced increased attention is being given to the role of non-tariff measures in impeding trade flows. The working definition of NTMs used in this report is 'government measures other than tariffs that restrict trade flows'. This covers a range of measures from health and safety measures through to the suite of regulations associated with trade and general matters such as transport costs and customs and administration procedures that may not be not directly under the control of governments but certainly under its influence.

This study examines NTMs facing exporters from the South and Southern African region in their major markets. It does not examine NTMs within the region itself. Data is from a wide range of secondary sources.

Exports are divided into three main categories. In the first, there are few NTM inhibiting the mining and metal sector. Coal may be the only exception to this, as it is heavily subsidised in parts of the EU.

Three of the main manufacturing exports from Southern Africa are automobiles, clothing, and iron and steel products. All three face distorted markets internationally. Currently the textile and clothing sector is actually benefiting through preferential access into the EU and US markets. However, when the international quotas are removed at the end of 2004 and if tariffs are reduced by either bilateral or multilateral liberalisation these preferences may be dissipated; thus threatening the sector in Southern Africa with increased competition unless productivity improvements can be made. Iron and steel exports from the region, were, at the time of writing, also benefiting from the US safeguard actions, as these exports were exempted from the safeguard actions and consequently received higher prices through the effects of less global competition in the US market.

Internationally, agriculture is a very distorted sector as the OECD countries continue to heavily support their producers. This would suggest that NTMs are a problem, and that is indeed the case. Balancing this is the preferential access that the region has for some agricultural products into the EU in particular. Sugar is the main example, as Mauritius and others gain considerable economic rents into the EU market. SPS issues are a concern for many products into the developed country markets, as it is difficult and costly for the smaller developing countries in the region to meet these exacting standards. Other NTMs include tariff quotas on fruit exports.

Many NTMs may exist for legitimate reasons such as consumer protection or as a component of the business methods necessary for doing trade. These measures only become genuine NTMs when they are implemented in such a manner as to unnecessarily add to costs or inhibit trade. In the multilateral context the WTO is international disputes arbitrator on many NTMs, although very few NTM's have been taken to dispute settlement. Bilateral FTA negotiations also present opportunities to alleviate these problems as well as reduce tariffs, and these opportunities must be taken. The paper discusses these aspects in more detail.

There is enough information and analysis in this paper to affirm that NTMs are an issue for exporters from the region. The suggested way forward includes addressing the NTMs as discussed in the previous paragraph and also building upon this current study to obtain more detailed information on the problems. The best method of doing this is by seeking primary data from exporters and business people. At a minimum this would entail a series of face-to-face interviews with these key actors, but perhaps a wider (e)mail survey could be considered to canvass a more definitive information base.

Quantification of the costs to the region of NTMs is needed. However, firstly it is necessary to get a more in-depth understanding of the problems, and secondly international quantification methodologies can be best described as being in their formative stages.