Estimation of the potential economic welfare to be gained by the South African Customs Union from trade facilitation

Abstract

Background: Trade facilitation is important for the South African Customs Union (SACU) countries because the expansion of international trade is a priority to enhance their economic growth. Unfortunately, the high trade compliance costs facing importers and exporters operating in SACU are in conflict with this objective.Aim: This article aims to quantify the annual economic welfare gains that the member countries of SACU could realise from reforms that would reduce the documentary and border compliance time and costs.Methods: We use a partial equilibrium welfare economics framework of up-to-date sets of general equilibrium estimates of the import demand and the export supply elasticity in a country. The impact on the volume of trade flow and economic welfare is quantified to reduce documentary and border compliance time and trade compliance costs.Results: The economic welfare changes from reducing the documentary and border compliance time and costs for imports and exports would be between US$2.2 billion and US$3.7 billion (2018 prices), or between 0.54% and 0.90% of GDP of the SACU countries. The economic welfare gains from reducing the excess administrative costs in imports and exports of SACU members would be between US$2.2 billion and US$3.7 billion (2018 prices), or between 0.54% and 0.90% of the GDP of the SACU.Conclusion: The most important reforms needed to realise these cost savings include a single window administrative structure. In this case, both customs, health, welfare, and controls, as well as the payment of all duties, taxes, and licenses are handled by a single administrative office. Failure to move fast regarding such changes would have a negative impact on the well-being of SACU members.

The Role of Revenue Authorities in International Trade Facilitation in East African Community

“…According to Otsuki, Honda and Wilson (2013), trade facilitation is related to changes in the trade environment in terms of reforms, modernisation and simplification of the requirements with the aim of reducing time and saving on costs of trade. Safaeimanesh and Jenkins (2021) on the other hand describe the process of trade facilitation as the implementation of key policies that ensure that there is seamless trade with efficient communication and transport infrastructure among the Regional Trade Organization (RTO) member countries. Trade facilitation measures are recognised to be essential in helping to strengthen trade ties between countries, thus speeding-up the process of economic growth and development (OECD, 2019).…”

“…Moreover, the stipulation of their roles and their integration has not been put across to clearly describe how they implement key trade facilitation policies in the region. Evidence from other regions such as Europe (Safaeimanesh & Jenkins, 2021) Asia (Ismail, 2020) Gulf and Caribbean (von der Ptten, 2021) show that trade facilitation is mainly enhanced by the integration of the revenue administration agencies in the member countries. This having not been empirically proven in the region and particularly in the EAC, this study was set to establish the role that the revenue administration authorities/agencies in the EAC member countries play in enhancing trade facilitation in the region.…”

Estimation of Economic Welfare Gains from Trade Facilitation in the Andean Community

“…Furthermore, the total potential welfare gains in the region are estimated to be between USD 1.56 billion and 2.69 billion, amounting to 0.24% to 0.42% of their GDP. Using a similar methodology, Jenkins and Safaeimanesh have reported that the potential economic gains in the South Africa Customs Union (SACU) amount to USD 2.2-3.7 billion in 2018 prices [23]. In this study, the authors include a well-structured single window system amongst the suggested policy options to be implemented in this customs union.…”

The Implications of Food Security on Sustainability: Do Trade Facilitation, Population Growth, and Institutional Quality Make or Mar the Target for SSA?

“…What is more, even the continent's complex agricultural supply chains are challenged by intricate and burdensome import and export procedures (Kareem et al, [7]). Available statistics reveal the customs clearances are often involved in long delays, even for perishable goods that require minimum clearance times (Kuteyi,& Winkler,[8]; Safaeimanesh, S., & Jenkins, [9]). Instances abound, in Kenya, permits to legally import grains are available only in Nairobi (Nyameino, Kagira and Njukia [10]).…”