Barriers to trade Flashcards
Aim of eliminating barriers to trade
Increase trade while connecting infrastructure facilities and promote effective transportation of traded goods between destinations
Economic integration
Can remove tariff barriers between countries
Spatial Integration
The development of targeted infrastructure linkages between countries can facilitate the physical mobility of goods in the region
Tariff barriers (definition and removal)
Taxes are placed on imports from other countries to protect local producers, manufacturers, and intermediaries.
Removal of barrier = trade liberalisation through economic integration
Non tariff barriers (definition and removal)
Restricted physical ability of freight vehicles to transport traded goods between countries.
Removal= Trade routes through spatial integration
Effect of Import Tariffs
Negative effect on trade between countries and affects many role players in the supply chain
Economic integration Implementation
It is implemented in stages to eliminate tariffs and stimulate trade.
Different levels are implemented, and each level signified increased integration and elimination of barriers to trade.
Most successful example of regional integration = EU (implemented all 5 levels of economic integration)
SADC only achieved the first 2 levels
5 levels of economic integration
- Preferential FTA
- FTA
- Customs union
- Single market
- Economic and monetary union
Look at table in notes for discriptions
Spatial Integration in SADC
Non-tariff barriers -> Physical constraints includng terrain that results in a lack of accessibility.
Primary non-tariff barrier = lack of quality of physical road and rail infrastructure in SADC. = Negative impact on trade
Regional transport supply chain
Regional transport of G/S and the efficient functioning of regional transport supply chains incorporate 3 entities:
- Customs and control agencies (regulate transportation of traded goods)
- Transport companies (transport goods from point A to B)
- Traders (producers, manufacturers, intermediaries, consumers that acquire G/S from each other)
Steps in the regional supply chain
- Initiation of transport in country A
- Loading transport vehicles in country A
- Control en route in country A
- Border procedures in country B
- Customs clearance at destination in country B
The primary challenge to the functioning of the supply chain
Different customs and control agencies that operate in each country
Transit system
Procedures, institutions, infrastructure and legal framework that controls the movement of goods.
Developed by each country to guide how transport should take place in their country.
Examples include Max loads trucks can carry, how certain goods can be transported, and costs of using roads with regards to different vehicles.
The lack of a regional integrated transport system is reflected in the unreliability of trade routes.
How can unreliable trade routes become a reality?
- Transport time unpredictability (not many options when a link in the supply chain fails)
- Service interruption prospects (bottlenecks and lack of infrastructure)
- Variety of role players (public control and regulatory agencies. Transactions take place between many roleplayers, some of which have conflicting agendas)
How can you improve the reliability of trade routes?
Essential to have an integrated regional transport system
Physical trade route infrastructure
Physical infrastructure seeks to increase accessibility between countries in the region by eliminating physical hindrances that limit internal mobility.
Objective -> goods to move freely
Trade routes
Trade routes connect landlocked countries (such as Botswana, Zambia and Lesotho) with ocean ports and national trade networks (including those of Angola, Mozambique, Tanzania and South Africa), increasing trade efficiency and productivity, and unlocking new development opportunities.
Aid the mobility of people and goods
primary function = facilitate trade and increase accessibility
Transport costs and physical infrastructure
High transport costs = limited quality of infrastructure = limited competitiveness
For efficiency, there are two functionalities that should be followed:
1-Connecting functionality (efficiently facilitate trade in goods between two or more towns and cities)
2-Organising functionality (increased access between countries within our region)
Advantages of targeted investment in physical trade route infrastructure
Direct revenues - from infrastructure usage (fuel levies and toll charges)
Secondary impacts - through a collection of transport functions (increased productivity imports) and the development of economies of scale
Value-adding potential -logistical activities along the line of the route
Political advantages - fulfilling a leadership role in the region through increased economic integration and trade
Linear development
development spreads outward from the
physical connecting infrastructure this may occur as activity increases on the trade route between two large towns or cities and in the process encourages the development of additional economic activity in close proximity to the route
development of a trade route takes
place in three phases:
Phase 1: There is an absence of physical infrastructure that connects member countries
Therefore, there is limited trade between the
member countries of the region
Phase 2: Targeted investment and management of resources bring about the development of physical infrastructure
Trade in the region increases however some
weakness in the physical trade route infrastructure remains with traffic bottlenecks and missing infrastructure links contributing to inefficient trade facilitation
Phase 3: (ideal phase) Through continued investment and resource coordination, in addition to the development of non-physical infrastructure to facilitate effective trade between different countries, weaknesses in the trade routes are eliminated as they fulfill their potential as investments for spatial integration
SADC physical infrastructure
SADC focuses on the improvement and maintenance of multiple trade routes. Their goal is to increase regional trade due to economic and regional integration.
SADC secretariat
SADC regional institution that is responsible
for planning formulating a sufficiently lobbying member countries for
the implementation of transport policies.
The prime aim of these transport policies is
improving the physical trade route infrastructure by addressing the missing links and maintaining existing routes
SADC Secretariat must oversee this policy
the planning process to improve trade between member countries
