Why Discuss Cross-border Harmonisation at the 2013 ICA Plenary Meeting?

31 October 2013

Source: By Brian Baxendale, Phil Brown, Tim Bushell and Tim Lamont DFID

Roads, Power stations, clean water supplies, telecommunications; these are some of the recognisable building blocks of the modern world that enable the communities we live in to function. They allow industrial production, job specialisation and trade which has provided dramatic improvements in living standard around the world. Large tangible assets are the high-profile end of hard infrastructure. On the other hand the soft infrastructure issues, regulations and policies that under-pin their use are rarely considered a stimulating topic of discussion.  So why has the UK and the ICA decided to focus on cross-border transport regulations at this year’s ICA plenary meeting?

Only the very largest economies of the world can afford to rely on economies of scale within their own borders.  For the majority of countries and especially those with small populations, regional and international trade is critical to allow them to develop their comparative advantage, benefit from specialisation and participate in global value chains.

Hard physical Infrastructure networks can only be effective if the soft regulatory and policy institutions running them operate efficiently. Regional integration will only work if cross-border regulations are not only harmonised but also implemented consistently.

It is well known that across the continent of Africa the cost of cross-border trade is prohibitive. Until these costs can be reduced African producers will remain globally uncompetitive. To reduce the costs of cross-border trade, there is a need to address the two major challenges: 1) improving transport and trade infrastructure, and  2) implementing trade facilitation measures in an efficient manner.

The 2013 ICA plenary is an opportunity to review progress on integration efforts and to focus on vital efforts that harmonise cross-border regulations and policy.

The UK Department for International Development supports regional integration primarily through the UK financed Trademark Southern Africa Programme and the multi donor funded Trademark East Africa programme.  Amongst many activities, both programmes invest strongly in eliminating non-tariff barriers to trade, legislation, training, and streamlining of border facilities.

TradeMark Southern Africa (TMSA) supports the COMESA-EAC-SADC Tripartite of Regional Economic Communities to design and implement its programmes that aim to improve trade and transport infrastructure as well as improve trade facilitation measures.

The most effective way to reduce the cost of transport is to reduce the time it takes to cross borders. It is not uncommon for trucks to remain at border posts for days, owing to a combination of inefficiencies in the border clearance systems and inefficiencies of the private sector (including importers/exporters, clearing agents, freight forwarders and transporters). A truck will, on any typical journey, be stationary for between half and two-thirds of the journey time. The transporter charges for this down-time and, in Southern Africa at least, every day a truck remains stationary adds another US$500 to the transport cost. To ship a 20 foot container from Durban to Lusaka, crossing two borders, costs in the region of about US$8,000, or about five times more than the cost of shipping the container to Durban.

To address these high costs of transport the COMESA-EAC-SADC Tripartite, with support and assistance from TMSA is implementing a comprehensive trade and transit facilitation programme with the following elements.

• Reduce clearance times at borders through the implementation of One-Stop Border Posts; design and implementation of Coordinated Border Management systems; procedure improvements (including modernisation of customs legislation); improving cross-border data exchange systems and building capacity in post-clearance audits and risk assessment.
• Improve transport market liberalisation through developing a Cross Border Road Transport Operator Registration System; reviewing the legal instruments regulating Vehicle Over-Load Control; preparation of a draft instrument to regulate vehicle overloading for the Tripartite region; and finalising the harmonised standards and regulations on vehicle fitness.

Like TMSA, Trademark East Africa (TMEA) believes that cross border harmonisation is a powerful trade promotion tool.  One of the greatest challenges to effective trade facilitation in East Africa is non-tariff barriers to trade (NTB’s). TMEA has been supporting initiatives on NTB identification and elimination through a multi-pronged, national/regional approach:

• Supporting the EAC Time-Bound Matrix for NTB elimination and fostering bilateral country negotiations to eliminate them;
• Turning the National Monitoring Committees (NMCs) into credible institutions focused on eliminating NTBs and providing technical assistance which addresses existing gaps in the efforts against them;
• Supporting the implementation of an on-line system, in partnership with TMSA, and of an SMS-based mechanism to report NTBs;

The highlight of TMEA’s efforts for NTB elimination initiatives is its support for a landmark regional law which introduces finality to the elimination process in the EAC. The draft law includes a legally-binding mechanism with the possibility of sanctions for partner states which refuse to eliminate existing NTBs or which create new ones. The TMEA-supported draft law has met important milestones when it was technically approved by all NMCs and by the private sector through national and regional validation workshops. The draft law is currently being analysed by EAC policy organs and, following meeting postponements, is expected to be approved by the first quarter of 2014.

In order to facilitate inter-regional trade both TMSA and TMEA are supporting regional harmonisation of standards. TMEA’s progress to date on standards harmonisation includes:

• Supporting the establishment of an Arusha-based, Private Sector Standards Platform at the East African Business Council, along with its governance structure;
• Training on new procedures aligned with international best practices for EAC standards development;
• A program which supports regional harmonization of standards.

As a result of TMEA’s support for regional standards harmonization, 74 standards have been regionally harmonized, 40 of which will be adopted as EAC regional standards during 2013. The impact of these activities is that in 2013 US$ 290 million worth of products from the most traded goods in the EAC, will no longer need to comply with multiple national standards bodies requirements. Therefore, TMEA’s work on regional harmonisation of standards is impacting 8% of the intra-EAC trade basket, estimated at US$ 3.5 billion during 2013.

Category: Transport