WTO Trade Facilitation Measures and the Extensive Margin of Exports in the Tripartite: COMESA – EAC – SADC

This study uses a gravity model for the year 2015 to analyze the impact of the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) on extensive margin of exports (export diversification proxied by the number of products exported) by the Tripartite (COMESA, EAC and SADC) country members. It appears that all trade facilitation measures (except “fees and charges”) have a positive and significant effect on export diversification irrespective of the type of product or trading partner. “Appeal procedures” (the rights to traders to obtain review and correction of decisions made by Customs officials in an administrative and/or judicial proceeding) measures have the most critical effect. Exports within the Tripartite are more impacted than exports with partners outside the region. The increase in number of exported products is higher for commodities than for manufactured goods with intra-tripartite exports, whereas the opposite is observed with exports to partners in the rest of the world. Counterfactual analysis shows that if the Tripartite countries comply with regional best practice (or the WTO requirement) in trade facilitation, “advance rulings” (binding information about customs treatment of goods before imports) and “appeal procedures” measures would have the greatest effect on exports diversification respectively within the Tripartite, and with the rest of the world. SADC trade facilitation policies perform better than the EAC’s and COMESA’s, regardless of the type of product, partner or trade facilitation measure (except for “fees and charges”). The EAC performs better than COMESA. This study recommends implementing the WTO TFA which could increase export diversification both within the Tripartite Free Trade Area and with rest of world partners.