Murky Trade Waters: Regional Tariff Commitments and Non-tariff Measures in Africa

Abstract

In several African regions, economic integration has successfully reduced tariff protection by freezing the opportunity to raise applied tariffs against fellow integration partners above those promised. In this paper, we examine whether the regional tariff commitments on the continent have come at the expense of adverse side-effects on the prevalence of other – non-tariff – trade barriers. More specifically, regional tariff commitments have not only created large tariff overhangs – the difference between Most Favoured Nation (MFN) bound tariffs and effectively applied tariffs – for African WTO members, but they also sharply reduced their tariff policy space within Africa, thus leaving regulatory policies such as sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT) as one of the few legitimate options to level the playing field with market competitors. Comparing the effects of applied tariff overhangs towards all vis-à-vis African trading partners on SPS and TBT notifications of 35 African WTO members between 2001 and 2017, we find no overall relationship between tariff overhangs and import regulation in our preferred model setting. By contrast, larger tariff overhangs specific to intra-African trade relations have a significant share in increasing the probability of SPS measures and TBT. Our findings have important implications for future Pan-African integration under the recently launched African Continental Free Trade Area (AfCFTA) in that success of fostering continental economic integration not exclusively depends on the realization of tariff liberalization, but similarly on a mindful coordination with non-tariff provisions.

Keywords: Economic integration, import regulation, non-tariff measures, tariff liberalization, tariff overhang, trade policy substitution

JEL Classification: F13, F14, F15