Trade Facilitation Capacity Needs

Policy Directions for National and Regional Development in West Africa

Gbadebo Odularu, Philip Alege, Gbadebo Odularu, Philip Alege

• Publisher: Palgrave Pivot
• Year: 2019
• Print ISBN:
  9783030059453
• eBook ISBN:
  9783030059460
• Topic: Economics
• Subtopic: International Business
• Index: Economics

This book provides a comprehensive analysis of both national and regional trade facilitation capacities, issues, challenges and lessons, with a special interest in sustainably advancing West Africa's regional trade facilitation agenda. It examines the contributions of trade facilitation towards enhancing regional integration and economic expansion in the face of increasing non-tariff barriers that highly characterises West African agri-food and non-agricultural markets. The authors recommend new conceptual frameworks, appropriate initiatives, and workable policy recipes towards enhancing West Africa's trade facilitation agenda as well as the regional economic transformation trajectory in the face of the ongoing African Continental Free Trade Agreements (AfCFTA). The book underscores the geopolitics, opportunities and challenges that confront West Africa in the increasingly dynamic regional trade facilitation policy space. Readers will learn how West Africa can improve its regional trade facilitation game amidst emerging capacity challenges.

© The Author(s) 2019

Gbadebo Odularu and Philip Alege (eds.)Trade Facilitation Capacity Needshttps://doi.org/10.1007/978-3-030-05946-0_1

Begin Abstract

1. Introduction: The Changing Landscape of Trade Facilitation and Regional Development Issues in West Africa

Gbadebo Odularu^{1, 2, 3}

(1)

Department of Accounting, Economics and Finance, School of Business and Technology, Marymount University, Arlington, VA, USA

(2)

Cross-Border Education Research Division, American Heritage University of Southern California (AHUSC), Ontario, CA, USA

(3)

Centre for the Research on Political Economy (CREPOL), Dakar, Senegal

Gbadebo Odularu

Email: [email protected]

Email: [email protected]

Email: [email protected]

Abstract

The advent of technological advancement, digital commerce, and increased trade integration has continued to strengthen South-South regional trade institutions, partnerships, and capacities. With Brazil, Russia, India, China, and South Africa (BRICS) now accounting for a substantive share of the global gross domestic product (GDP) and the robust economic growth and trade expansion being experienced in Africa, collaboration between governments, regulators, and organized private sectors is crucial for enhancing trade facilitation capacities in Africa. However, the continent and its sub-regions are continually being confronted by increasing trade costs arising from non-tariff sources, such as inefficient transportation, weak logistics infrastructure, cumbersome regulatory procedures, lengthy customs processes, and incoherent business documentation, thereby placing Africa at a competitively disadvantaged position. While discussing selected regional integration and development initiatives in West Africa, the article expatiates on the strategic importance of advancing trade facilitation agenda in the face of increasing non-tariff measures (NTMs) and the ongoing African Continental Free Trade Area (AfCFTA) negotiations.

Keywords

Trade facilitationNon-tariff measuresAfCFTAWest AfricaECOWASWTO

End Abstract

When goods and services cross borders in international trade, information needs to be passed between relevant parties, whether private companies or public bodies, including suppliers, logistics providers, customs , regulatory agencies, sellers and buyers. Paperless trade refers to the digitization of these information flows, including making available and enabling the exchange of trade-related data and documents electronically. Less formally, one can think of this as cross-border trade transactions using electronic data in lieu of paper-based documents. (World Economic Forum (WEF) 2017)

1.1 Introduction: Economic Context and Rationale

In this twenty-first century, increasing economic growth, improved governance, and enhanced trade are gradually becoming parts of the ‘Africa rising’ narrative. Given the nature of these countries, the two inseparable and most important sectors—Agriculture and Trade or Commerce—remain the backbone of the West African economy. However, there is an increasing gap between trade facilitation (TF) commitments and implementation, which has a direct impact on West Africa’s capacity to export its commodities—agriculture, manufacturing, and services. For West Africa to achieve its Sustainable Development Goals (SDGs) (specifically on reducing poverty, hunger, decent work, and sustained economic growth, etc.) and meet the expectations of Vision 2020,¹ the Economic Community of West African States (ECOWAS) has been promoting trade facilitation as a tool for the accelerated development of the West African economy. Trade facilitation remains one of the most viable and appropriate tools for achieving and accelerating sustainable development in West Africa. Its trade facilitation tool is designed to increase intra-regional commerce, sustainable boost trade volume, foster integration into the global economy, and contribute towards its realization of the United Nations Sustainable Development Goals (UN SDGs) .

The commercially gigantic countries in West Africa are Nigeria, which accounts for approximately 76 per cent of the total regional trade, followed by Ghana with about 9.2 per cent, and lastly by Côte d’Ivoire, which is estimated at about 8.64 per cent. Regional trade in West Africa is dominated by mining commodities (oil resources, iron, bauxite, manganese, gold, etc.) and agriculture (cotton, coffee, cocoa, roots and tubers, cereals, fruits, vegetables, and livestock products). However, the value chain of these commodities is highly inefficient, partly due to deficient access to accurate and timely data for enhanced national and regional trade facilitation and sustainable development (KGH Border Services 2016; Petersen 2017).

The core of the economic relations of the US with West Africa has been the African Growth and Opportunity Act (AGOA) of the year 2000. AGOA offers more than three dozen countries easy access to US markets by eliminating import tariffs. Experts and policymakers believe that, as the main trade policy of the US for Africa, it will bring about the economic and political development of Africa. But the outsized role of oil and apparel in African export growth has raised questions about whether AGOA can diversify the region’s economies and increase its competitiveness in global markets. Unfortunately, the US engagement in terms of trade with AGOA’s participants has declined since 2008 while Africa has found a new trade partner—China and expanded trade relations with China and other countries. The AGOA is a trade preferential programme for Africa that was established in the year 2000 to strengthen US trade relations with Africa and the Caribbean, enacted during the regime of President Bill Clinton as the US President. Further, it remains a potent and innovative trade strategy which allows AGOA-qualified African countries to overcome selected non-tariff barriers within the US marketplace. The American government saw the policy as an avenue to drive growth and sustain democratic dividends in Africa. It was also expected that AGOA would make the US-Africa relations stronger when the US markets are opened to millions of consumers from Africa.

It is correct to understand that non-tariff measure (NTM) can be linked to sustainable development directly or indirectly. When it is direct, it means there are policies that have an immediate impact on sustainable development, like those directed at protecting health and the environment. If it is indirectly linked, this could be as a result of trade policies that are geared towards fostering economic development with a spill-over effect on sustainability. The indirect linkage to sustainable development makes the cost of trade to slow down the impact of trade as an engine of growth. NTMs may also be seen as trade costs or non-tariff barriers (NTBs). NTMs that are legal but with non-trade motives can greatly restrict and distort international trade flows. Even as NTMs are increasingly becoming popular in most countries, there is still a serious transparency gap. The United Nations Conference on Trade and Development, with support from partners, is at the forefront of an international effort to collect comprehensive data on currently imposed mandatory regulations. It is a fact that each NTM has implementation processes, and it becomes more difficult when the procedures are not very clear. This increases costs and causes delays. However, the World Trade Organization (WTO) Trade Facilitation Agreement has the powers to reduce drastically procedural obstacles and delays at the border.

The benefits of international trade and trade facilitation rely basically on the absence of trade restrictions among trading nations. The global and gradual reduction in tariffs is increasingly being replaced by NTMs. The effect of NTMs is not exactly clear, as it seems to be a bit confusing. NTMs limit import flows to other countries, and measuring the accuracy and effect can be difficult. In addition to the growing institutional weakness and rising compliance cost, overcoming these trade barriers requires an enhanced capacity to efficiently facilitate trade at regional and international levels. As discussed in the fourth chapter of this book, it is important to reduce the number of days for the clearing of goods, reduce the amount of documentation required for trade, and reduce the cost per container both for export and for import. It is believed that overcoming such NTBs will increase the volume of intra-regional trade in the ECOWAS and, consequently, raise the level of trade flows between partners in the region. Based on this background, the purpose of this article is to discuss the strategic importance of advancing West Africa’s trade facilitation agenda in the face of increasing NTMs and the ongoing African Continental Free Trade Area (AfCFTA) negotiations.

1.2 Regional Integration and Development Initiatives in West Africa: A Glimpse²

Over the past decades, regional development platforms have proliferated in West Africa. However, economic development in the region has not met the required expectations. Though West Afric...

Table of contents

• Cover
• Front Matter
• 1. Introduction: The Changing Landscape of Trade Facilitation and Regional Development Issues in West Africa
• 2. Addressing Trade Facilitation Commitments and Implementation Capacity Gaps: Issues and Evidence from Nigeria
• 3. Building a Smart Deal for Nigeria in the AfCFTA Negotiations: Issues, Processes and Policy Directions
• 4. Bilateral Trade Flows, Trade Facilitation, and RTAs: Lessons from ECOWAS
• 5. Conclusion and Policy Recommendations: Concrete Strategies for Advancing Trade Facilitation Agenda and Fostering Regional Economic Development in West Africa
• Back Matter