The Impact of Non-tariff Barriers on Maize and Dry Beans Trade in The East African Community
The East African Community (EAC) committed to elimination of non-tariff barriers (NTBs) in order to realize the benefits of a single economic market, following gradual removal of tariffs on intra-regional trade by signing and ratifying the EAC treaty and customs union protocol. However, since its re-launch in 1999 numerous sources of non-tariff trade barriers persisted to impede trade among the EAC Partner States thereby defeating the purpose and spirit of regional integration. This study examined the impact of NTBs on intra-regional trade in two agricultural commodities; maize and beans using three models namely; the economic surplus model to estimate the benefits that would be realised with elimination of NTBs, Faini Model to evaluate the price elasticity of maize demand and Wu model to estimate trade loss incurred due to NTBs. Agricultural trade accounts for more than 65% of EAC traded commodities by volume. Maize and beans were selected for study as they were not only major staple food crops in this region, but also most traded agricultural commodities that contributed significantly to income generation for rural households. This study was carried out through analysis of existing secondary data as well as primary data collected from stratified randomly sampled respondents. The objectives of this study were; to identify the different types of Non-Tariff Barriers that affect maize and beans trade within the EAC, evaluate the extent to which the main Non-Tariff Barriers affect maize and beans trade in the region, estimate trade benefits that would accrue to the region with reduction and eventual elimination of NTBs and lastly, identify the main factors that contribute to persistence of Non-Tariff Barriers in maize and beans trade in the EAC region. The results of this study identified twelve types of NTBs and the three main ones ranked according to their statistical significance levels were; road blocks, unclear and cumbersome documentation required of the traders and other stakeholders as well as the unclear and varying trade regulations such as SPS measures, KEPHIS certificate, KEBS standards and axle load requirements.It revealed that a total of 23 documents were required at one time or another of a trader on transit to neighbouring Partner States which should not be the case with customs union and the common market protocols in place. It revealed that over 95 percent of maize and beans trade was carried out through informal channels due to prevalence of NTBs.This therefore implied that NTBs caused 95 percent maize and beans trade loss to the EAC region. The potential benefits that the region stands to gain with reduction and eventual elimination of NTBs in the region was estimated to be US dollars 20.41 trillion worth of annual trade in maize and beans subsectors. The main causes of persistent NTBs in the region were: firstly,at regional level they includelack of harmonized standards, lack of enforcement mechanism for harmonized issues and lack of iv sufficient will power by Partner States to implement harmonized policies. Secondly, at national level the main factors were provision of inadequate public facilities, insufficient technically qualified staff, inadequate power supply and inappropriate clearance technology. Finally, the study provided trade policy recommendations to improve trade among EAC Partner States as well as the livelihoods of the EAC citizens. The main recommendation provided was that the Governments of the five Partner States should endeavour to enhance their will power and commitment towards regional integration of the EAC. They should endeavour to invest in streamlining trade and sensitization of the stakeholders since reduction and eventually elimination of NTBs identified in this study were paramount and would reduce the costs of doing business and contribute to the realization of increased revenues. Partner States should invest in public utility facilities such as supply of power, human resource and automated clearance systems while fast tracking harmonization of regional trade policies and regulations as well as implementation of those already harmonised. The results indicate that with the magnitude of the amounts of maize Kenya imports it should not export any maize at all.In fact Kenya should endeavour to increase production through more innovative means. There is need to streamline administrative procedures and regulations of cross border agricultural trade. There is need to simplify business registration and improve the efficiency of transit agricultural goods clearance at border points.Customs requirements should be made more transparent and clear while information flows should be made more easily available to all stakeholders by embracing modern technologies like ICT. Lastly, it recommended fast-tracking elimination of NTBs along major transit routes in the EAC region and improve the efficiency aspects to facilitate trade flows in the region by hastening the harmonization process of key trade policies.