Estimation of the potential economic welfare gains to SACU from trade facilitation

Shahrzad Safaeimanesh () and Glenn Jenkins ()
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Shahrzad Safaeimanesh: Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus

No 2021-10, Development Discussion Papers from JDI Executive Programs

Abstract: Trade facilitation is important for the South African Customs Union (SACU) countries because the expansion of international trade is a priority for enhancing their economic growth. Unfortunately, the high trade compliance costs facing importers and exporters operating in SACU conflict with this objective. 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. We use a partial equilibrium welfare economics framework that uses up-to-date sets of general equilibrium estimates of import demand and export supply elasticities by country. The impacts on the volume of trade flows and economic welfare are quantified to reduce documentary and border compliance time and trade compliance costs. 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 for 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. The most important reforms needed to realize these cost savings include a Single Window administrative structure. In this case, both customs, health, welfare, and controls and the payment of all duties, taxes, and licenses are handled by a single administrative office. Failure to move fast on such changes would have a negative impact on the well-being of SACU members.

Keywords: Trade facilitation; Southern Africa Customs Union (SACU); South Africa; Trade compliance costs; Trade reform; Economic welfare gains (search for similar items in EconPapers)
JEL-codes: D60 F14 O12 O24 (search for similar items in EconPapers)
Pages: 33 Pages
Date: 2021-08-06
New Economics Papers: this item is included in nep-isf
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Working Paper: Estimation of the Potential Economic Welfare Gains to SACU from Trade Facilitation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:dpaper:4577

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