INCORPORATING COLD CHAIN
ASSOCIATIONS NEWS which average around 8-9 %. However, he emphasised that while tariffs are a significant factor, they are not the primary constraints on trade. According to World Bank data, time spent on border compliance and documentation is a critical barrier to accessing African markets.
When considering the overall trade costs, Edwards highlighted that the average tariff faced by South African goods is around 7 %, with transport and insurance adding approximately 10 %. However, when including non-tariff measures— such as import quotas, licensing requirements, and customs clearance, the ad valorem equivalent cost can soar to about 169 %. This starkly illustrates that non-tariff barriers overwhelmingly inhibit trade more than tariffs alone.
Many nations have categorised their tariff lines into immediate liberalisation, delayed liberalisation and exclusions. He noted that countries have disproportionately allocated tariff lines to products that comprise higher shares of imports, particularly those with significant import barriers.
This allocation suggests that the impact of AfCFTA may be delayed, particularly for goods in Schedule B and Schedule C, which often include highly protected food and beverage products. For example, the average tariff on food and beverages is around 33 %, while vegetable products face an average tariff of 22 %.
Despite these challenges, simulations conducted by Edwards ' team indicated that AfCFTA has the potential to substantially boost South Africa’ s exports to new partners, with estimates suggesting growth rates of 18-30 % in medium-term exports to various countries. However, the overall aggregate increase in exports to Africa is projected to be modest at around 4 %.
He reiterated that while South Africa ' s exports are primarily directed toward SACU and SADC countries— where tariffs are minimal— AfCFTA presents a valuable opportunity for accessing new markets in the medium to long term.
LIMITED IMMEDIATE IMPACT ON AGGREGATE TRADE
Edwards acknowledged that, despite the promising outlook of AfCFTA, the immediate impact on the aggregate value of trade may be limited. This is largely due to the low base level of trade with new partners. As a result, while reductions in tariffs could yield some benefits, the overall effect on South Africa’ s trade figures will likely be modest at first.
To further illustrate the potential of AfCFTA, Edwards shared insights from simulations that assumed African economies would move halfway toward the World Trade Organization ' s trade facilitation agreement. These simulations aimed to model the effects of reduced trade costs on export flows.
The findings were clear: the most significant driver of export growth would stem from general reductions in trade costs, beyond just tariff reductions. The simulations indicated that while liberalisation of tariff schedules would lead to increases in exports, the potential benefits from improving trade facilitation would be even more pronounced.
He emphasised that the phasing of tariff reductions is gradual, suggesting a timeline of 10 to 15 years before the full effects are felt. He noted the importance of recognising that while progress has been made in liberalising trade, challenges remain. Some products critical to the cold chain sector may still be excluded from the agreement, limiting potential growth in these areas.
One of Edwards ' key takeaways was the vital role of the private sector in driving trade initiatives. He argued that for AfCFTA to realise its full potential, businesses must actively engage in promoting government agendas and implementing the necessary protocols. The private sector ' s involvement is essential to overcoming barriers and ensuring that the gains from trade facilitation, along with tariff reductions, are fully realised.
Some products critical to the cold chain sector may still be excluded from the agreement.
In summary, the gradual nature of tariff phase-ins, combined with the critical need for enhanced trade facilitation, underscores the importance of collaboration between the public and private sectors. As stakeholders navigate this complex landscape, the focus must remain on implementing the annexes of the agreement to unlock the vast potential of intra-African trade. CLA
The most significant driver of export growth would stem from general reductions in trade costs, beyond just tariff reductions.
Image by Drazen Zigic on Freepik
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