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GTAP Resource #4418

"Reducing Trade Costs in East Africa: Deep Regional Integration and Multilateral Action"
by Balistreri, Edward J., David G. Tarr and Hidemichi Yonezawa

Evidence is now substantial that with the progressive global decline in tariffs over several decades, trade costs are a much more substantial barrier to trade than tariffs. Moreover, trade costs are especially high in sub-Saharan Africa compared to other regions in the world. We decompose trade costs into three categories: costs that can be lowered by trade facilitation; non-tariff barriers; and the costs of business services. We develop a ten –region, 18 sector global trade model that includes Kenya, Tanzania, Uganda and Rwanda of the East African Customs Union (EACU) plus COMESA and SADC. We assess the aggregate impact of the reduction of all three types of trade costs as well as the reduction of each of the barriers separately to assess the relative importance of each. We assess “deep integration” initiates within EACU to reduce these barriers to trade and how much more there is to gain if the trade cost reduction initiatives could be extended multilaterally or to a wider regional grouping, namely the proposed Tripartite Free Trade Area among EACU, COMESA and SADC. In the cases of Kenya and Tanzania, we also assess the impact of liberalization of non-discriminatory barriers against investors in services, i.e., barriers that affect home investors equally with foreign.
We find that deep integration (the removal of the barriers within EACU) results in significant gains for our four EACU countries, especially from improved trade facilitation. Extending the lowering of non-tariff barriers and services liberalization multilaterally would increase the gains between two and seven times, depending on the EACU member country...

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Created: Tarr, D. (4/14/2014)
Updated: Tarr, D. (5/1/2014)
Visits: 1,718
- Non-Tariff barriers
- Non-Tariff measures in services
- Preferential trading arrangements
- Africa (East)

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