Reducing Trade Costs in East Africa : Deep Regional Integration and Multilateral Action
There is substantial evidence that with the progressive global decline in tariffs over several decades, trade costs are a more significant barrier to trade than tariffs, especially in Sub-Saharan Africa. This paper decomposes trade costs into three...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank Group, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/09/20250345/reducing-trade-costs-east-africa-deep-regional-integration-multilateral-action http://hdl.handle.net/10986/20367 |
| Summary: | There is substantial evidence that with
the progressive global decline in tariffs over several
decades, trade costs are a more significant barrier to trade
than tariffs, especially in Sub-Saharan Africa. This paper
decomposes trade costs into three categories: costs that can
be lowered by trade facilitation, nontariff barriers, and
the costs of business services. The paper develops a
10-region, 18-sector, global trade model that includes
Kenya, Tanzania, Uganda, and Rwanda of the East African
Customs Union. The analysis finds that deep integration in
the East African Customs Union that lowers these trade costs
results in significant gains for the four countries,
especially from improved trade facilitation. Extending the
lowering of nontariff barriers and services liberalization
multilaterally would increase the gains between two and
seven times, depending on the country. that the analysis
also finds that reducing nondiscriminatory services barriers
in Kenya and Tanzania would increase welfare even more than
multilateral reduction of discriminatory services barriers.
The paper is innovative both conceptually and empirically.
It contains foreign direct investment in services and is the
first paper to numerically assess liberalization of barriers
against domestic and multinational service providers in a
multi-sector, multi-region, applied general equilibrium
model. The paper uses new databases of the ad valorem
equivalents of barriers in services and the time in trade
costs. Both databases are shown to be important to the results. |
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