Tariff barriers decreasing in Africa, but the cost of non-tariff barriers remains the highest in the world

The UNCTAD publication ‘Key statistics and trends in Trade Policy’, is a must-read report that all trade officials and experts with an interest in Africa (or in other developing countries), should carefully analyze to understand the dynamics of trade policies in the continent, in comparison with other regions of the world. Published annually, it gives a snapshot of the trade-related issues of particular importance to Africa and other developing countries/regions in terms of their participation in the international trading system. The latest edition of the report, available on the UNCTAD website, shows that despite the slight decline of African (and more generally, of developing countries) tariffs in the last decade, the tariff restrictiveness remains still high in Africa, with tariffs peaks that hit some key sectors of the African economy such as agriculture, apparel, textiles, and leather products.

The graphic below is self-explanatory. African countries adopt minimum restriction to their exports (these restrictions are the lowest compared to other developing countries or regions), while they adopt the highest restrictions on imports, after Southern Asia. The import restrictiveness index (TTRI) shows however that these restrictions have progressively declined since 2012. This is a good news.

As usually, a good news is always followed by a bad news. Despite the reduction in tariffs, non-tariff barriers (NTBs) in Africa seem to have increased, being more than double of those existing in southern Asia and almost the double of those in Latin America. The ad-valorem equivalent of NTBs, an index that gauges the additional costs that NTBs generate for the importer (which in turn increase the cost to consumers of imported products), shows that in Africa the incidence of NTBs is the highest on the planet, as depicted in the graphic below.

Tariffs also remain substantial for most South–South trade, which means that developing countries apply higher tariffs when they exchange with each other, than when they exchange with developed countries. A paradox that characterizes also intra-African trade and that the African Continental Free Trade Area (AfCFTA) hopes to resolve in the medium term.

Interestingly, for the first time, the UNCTAD report includes an analysis of the unilateral trade preferences, and in particular the Generalized System of Preferences (GSP) programs, which are a preferential trade scheme which is implemented by many developed nations, as well as some emerging economies, that aim to boost export competitiveness from poorer countries by providing lower or zero tariffs to their products when imported in their respective markets. The report notes that the United States GSP, four years after its expiration in December 2020, is still waiting a renewal from the United States Congress with a possible retroactive effect that will allow US importers to ask a refund on duties paid on imports in the US from GSP-eligible countries starting from 1th January 2021. On the other hand, the US maintain another unilateral trade preferences scheme - the African Growth and Opportunity Act (AGOA) program - who despite close to its expiration date (in 2025), will be probably renewed, as a bill is currently pending before the US Congress for approval that establishes the extension of such scheme until 2041. In this regard, an interesting information that the UNCTAD report gives is that the AGOA preferences utilization rates in the US have doubled from 2019 to 2022.