區域貿易協議對國際貿易的影響
 

基于國際貿易對坦桑尼亞經濟發展的重要性, 理解區域貿易協議的影響是為制定政策創造有利的環境非常重要的一步，可以將區域貿易協議對國際貿易的影響最大化。本文通過重點研究坦桑尼亞簽訂的各種區域貿易協議，探討了區域貿易協議對國際發展的影響。
 

在研究過程中我們發現坦桑尼亞的區域貿易協議簽署對國際貿易有很少或沒有影響。由于各種因素，區域貿易協議的作用也是最低的;
 

私營部門的參與是有限的，并且主要的利益相關者之間缺乏區域貿易協議的意識。
 

因此,坦桑尼亞在國際貿易中的績效一直是最小的，并且對坦桑尼亞的外國直接投資的總量沒有增加，坦桑尼亞與其他國家之間的進出口也沒有增加。為了解決這些問題,本文建議政府應該參與并為私營部門提供區域貿易協議問題的培訓。

 

Impact Of Regional Trade Protocols On International Trade Economics Essay

 

Due to the significance of international trade to the economic development of Tanzania, understanding the impact of regional trade protocols is a very important step towards creating conducive environment for formulating policies that will maximize the impact of regional trade protocols on international trade. This paper examines the impact of regional trade protocols on international development by focusing on various regional trade protocols in which Tanzania is a signatory.

 

During the study, it was established that, regional trade protocols in which Tanzania is a signatory has little or no impact on the volume of international trade. The contribution of regional trade protocols has been found to be minimum due to various factors such as;

 

Limited participation of the private sector and lack of awareness of regional trade protocols among key stakeholders.

 

As a result, the performance of Tanzania in international trade has remained minimum and has failed to increase the volume of Foreign Direct Investments directed towards Tanzania, exports from Tanzania towards other countries and imports from other countries to Tanzania. To address these issues, this paper recommends that the government should involve and offer training to the private sector on regional trade protocol issues.

 

1.0 INTRODUCTION

 

This paper makes an assessment of the impact of regional trade protocols on growth of international trade. To assess the impact of regional trade protocols on the growth of international trade, it is necessary to examine the extent to which particular regional trade protocols have led to more international trade between member countries and that is what this paper is all about.#p#分頁標題#e#

 

2.0 BACKGROUND INFORMATION

 

Current State of International Trade

 

Although developing countries have almost doubled their volume of world trade in over the last two decades, their share of global trade remains small. For instance, recently, exports from developing country to developed countries slowed as exports from developed countries to developing countries accelerated. Developing countries can increase exports only through accessing markets in developed countries.

 

The increase of volume of exports and hence international trade from developing countries can be achieved by diversifying into nontraditional exports, such as seafood products, fruits, vegetables, flowers, and processed foods. These trade patterns reflect the structure of global trade in which developed countries hold advantage over developing countries, hence the need for trade protocols.

 

3.0 TRADE PROTOCOLS

 

3.1 Introduction

 

Trade protocols are very important to countries which trade with each other because they provide a platform through which those countries can decide to make arrangements on how to conduct trade among themselves smoothly. Regional trade protocols are intended to enable member countries to participate in international trade in equal terms (World Bank, 2000).

 

Trade protocols are an important step towards enabling developing countries to have an equal footing with developed countries when it comes to international trade. One of the many ways in which developed counties have an unfair advantage over developing countries is the provision of subsidies and tariffs that act as barriers for developing countries to access markets (Josling, 2005).

 

Trade protocols are among other things, aimed at addressing market access constraints facing developing countries in overseas markets. Trade protocols help developing countries in seeking to have developed countries reduce domestic support to their farmers and commit to eliminate export subsidies. Through trade protocols developing countries have been offered markets access under a variety of schemes (ibid)

 

Tanzania has signed to many regional trade protocols. The objectives of these protocols include providing market access, and in doing so, stimulate growth of international trade. Market access is one of the factors necessary for international trade to grow. Tanzania has joined these regional trade protocols so as to improve its position in international trade and in doing so, bring about economic development.

 

These regional trade protocols aim at, among other issues, ensuring stability and fairness of market access opportunities for member countries or group of member countries either in multilateral or bilateral setting. Market access and expansion is important for Tanzania since it helps the country to participate in international trade without many constraints in accessing markets.#p#分頁標題#e#

 

Regional trade protocols in which Tanzania is a member can be categorized into three conventional levels: multilateral, regional and bilateral trade agreements. Multilateral trade agreements are those for which Tanzania participates only through its membership to a group of countries (e.g. African group, ACP countries, LDCs etc). Most of these multilateral agreements come from WTO and UNCTAD.

 

Regional trade protocols are those involving regional bodies and cooperation in which Tanzania belongs e.g. EAC, SADC and (previously) COMESA; in which Tanzania participates directly. Bilateral regional trade protocols are those based on mutually beneficial diplomatic relations between Tanzania and other countries or groups of countries

 

Also, trade protocols call for tariff cuts using formulas that are configured so as to allow meaningful trade to take place between countries. This is because certain countries hold unfair advantages over other countries in such a way that there is no way these countries can compete on equal ground when it comes to international trade. Trade protocols are also targeted towards specific products (Balasa, 1976).

 

According to Bhagwati and Krueger (1995), one of the requirements in trade negotiations is the balance between flexibility and discipline. For trade protocols to be successful, it is necessary that there is enough flexibility to accommodate unique needs of each member, and enough discipline to yield the gains in export market opportunities that are the important factor for trade negotiations.

 

The formulas used in trade protocols are determined by using various issues such as the level of industrialization of a particular country, types of products involved in trade between member states, level of income of individual countries, and existing levels of tariffs in trade set by individual countries or regional co operations.

 

According to Bhagwati and Krueger (1995), there are four classic types of trade protocol arrangements:

 

Free (or preferential) trade areas, in which member countries reduce or eliminate trade barriers between each other, while maintaining barriers for non-members.

 

Customs unions, in which member countries reduce or eliminate import duties between each other and adopt a common external tariff towards non-members.

 

Common markets, in which members expand the basic customs union by reducing the barriers to the movement of factors of production (labor and capital).

 

Economic unions, in which members aim to harmonize national economic policies, including exchange rate and monetary policies (e.g., a monetary union).

 

By definition, regional trade protocols provide preferential treatment for members and discrimination against non-members. Bhagwati and Krueger (1995) argue that regional trade protocols should be distinguished from cooperation agreements, which are aimed less directly at trade and factors of production, and instead commit members to work together towards a common end or purpose.#p#分頁標題#e#

 

Cooperation initiatives tend be more selective in their coverage and generally require less long-term commitment than integration. There are two types of cooperation initiatives:

 

Selected policy harmonization which include adoption of similar tax treatment of foreign investors and coordinated voting in international organizations; and

 

Joint production of public goods, including infrastructure (e.g., railroads, bridges, communications systems) or institutions (e.g., education, research) (ibid).

 

Regional trade protocols have various objectives depending on member countries and the nature of their cooperation. Some regional trade protocols are geared towards supporting inward-oriented trade while other regional trade protocols are geared towards outward-oriented trade strategy. Many regional trade protocols in developing countries are inward-oriented; that is, they were established to enlarge the domestic market (Bhagwati, 1992).

 

Sometimes, regional trade protocols are geared towards eliminating competition between firms among member countries. Regional trade protocols also include complementation agreements that facilitate allocation of particular advantages to certain member countries with regard to their advantages to protect them from competition. These are outward oriented regional trade protocols (ibid).

 

Regional trade protocols are also designed to expose firms to regional competition with a view towards improving their competency in global markets. This fundamental difference in orientation has an enormous impact on the potential economic gains from integration. Also, regional trade protocols differ depending on income levels of member. Countries with similar income level tend to be more cooperative (Langhammer and Hiemenz, 1990).

 

The following are regional trade protocol in which Tanzania is a member;

 

3.2 Southern African Development Community (SADC) Trade Protocol

 

Southern Africa Development Community (SADC) was formed in 1992 through the Windhoek Treaty to replace the southern African Development Co-ordination Conference (SADCC) of which the key objective was to lessen economic dependence on the apartheid RSA. This objective was inherited by SADC with the objective of facilitating market access and international trade between member countries.

 

The SADC protocol on trade has succeeded to enhance intra regional trade in goods and services based on fair and equally beneficial trade agreements. The trade protocol covers various areas of economic activities including; agriculture and minerals. As an integration scheme, the SADC is one of the latest additions to similar initiatives in Southern Africa.

 

SADC comprises of 13 countries, which are heterogeneous in both size and economic performance. The other 12 countries are; Angola, Botswana, the Democratic Republic of Congo (DRC), Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe. SADC trade protocols are aimed at stimulating the economies of member countries (Qualmann, 2004).#p#分頁標題#e#

 

By joining SADC, Tanzania has enjoyed many advantages by participating in cross-border trade and investments. The benefits will be much further after SADC becomes a Free Trade Area (FTA) in 2012. After the achievement of Free Trade Area status, member countries of SADC will be able to trade freely to each other as if it was one country, thus eliminating various barriers such as tariffs.

 

According to Qualmann (2004), it is through SADC that Tanzania has chosen to negotiate for other Economic Partnership Agreements (EPAs) as a mechanism for implementation of the Cotonou agreement between the European Union (EU) and the Africa, Caribbean and Pacific (ACP) countries. This agreement requires members to negotiate under the umbrella of regional blocs and not as individual countries.

 

The SADC trade regime is expressed by the SADC Trade Protocol. The Protocol was the result of the Maseru Summit of 1996. This trade protocol, which technically presents a Framework Agreement, is an interim arrangement which should be systematically strengthened and in 2012 be transformed into a full Free Trade Area, in compliance with Article XXIV of the GATT (ibid).

 

3.3 EAC Trade Protocol

 

Another regional trade protocol in which Tanzania is a member is the East African Community (EAC) trade protocol. One of the objectives of establishing EAC trade protocol is to facilitate trade among member countries. The EAC trade protocol has a customs union which among other things eliminates tariffs and other charges with regard to trade among member countries. In July 2010, the EAC went further by becoming a free labour market (Kabelwa, 2004).

 

Article 5 of the Treaty of the EAC stipulates that the community shall ensure the strengthening and consolidation of:

 

Cooperation in agreed fields that would lead to equitable economic development within the partner states and which would, in turn, raise the standard of living and improve the quality of life of their populations (ibid).

 

Long-standing political, economic, social, cultural and traditional associations between the peoples of the partner states so as to promote a people-centred mutual development of these ties and associations.

 

The EAC is therefore, also working on the institutionalization, at the regional level, of co-operation in trade.

 

3.4 African Growth and Opportunity Act (AGOA)

 

AGOA is aimed at increasing access to US markets for products produced in selected African countries and attract more foreign direct investments from the US into sub-Saharan Africa countries. Under AGOA, Tanzania and other member countries benefit from free market access to markets in the US. The AGOA arrangement also requires beneficiary countries to conform to WTO regulations on international trade (Mwalimu, 2003b).#p#分頁標題#e#

 

3.5 ACP-EU Cooperation

 

Another regional trade protocol in which Tanzania is a member is the European Union-Africa Caribbean and Pacific. The EU-ACP trade protocol facilitates negotiations for Economic Partnership Agreements (EPAs) which aim at creation of a Free Trade Area (FTA) where EU and ACP countries can free market access to each other free of tariffs and quota and at the same time, EU countries provide ACP countries with grants.

 

ACP-EU Partnership or Economic Partnership Agreements are trade protocols between the European Union and 6 regions (Caribbean; West Africa; East and Southern Africa, Central Africa, Southern Africa and the Pacific). They replaced trade chapters of the 2000 Cotonou Agreement between the EU and the ACP countries. The European Union is committed to ensuring that this trade protocol improves trading terms between European and ACP countries.

 

3.6 The Cotonou Agreement

 

On 23 June, the EU and its ACP associates signed a New Partnership Agreement in Cotonou, Benin. The Agreement replaced the Lomé Convention which governed EU-ACP development co-operation from 1975 to 2000. The new partnership agreement governs EU-ACP co-operation in the next 20 years. Economic and trade cooperation constitute on of the key pillars of the Agreement.

 

In line with the new Agreement, EU-ACP trade. Members are required to build Economic Partnership Agreements (EPAs) which consist of free-trade areas (FTAs) between the EU and groups of ACP countries. The Cotonou Agreement trade protocol contains 39 Articles and five annexes which are relevant for trade. They jointly aim to systematically remove trade barriers.

 

3.7 Common Market for Eastern Southern Africa (COMESA)

 

Tanzania withdrew from COMESA in 2000, after considering the cost implication of being a member to more than two organizations, and for which it could not leave SADC due to its political significance and the potential economic relationship with South Africa. The objectives of COMESA include; promotion of peace and security, creation of a large market; enhancing industrial productivity and competitiveness.

 

Other objectives of COMESA include; increased agricultural production and food security; harmonization of monetary, banking and financial policies; and development of reliable transport and communications infrastructure. Although Tanzania pulled out of COMESA since 2000, it is still useful for her to maintain its past trade relations with COMESA countries.

 

4.0 WORLD TRADE ORGANIZATION (WTO)

 

4.1 Introduction to WTO

 

WTO is an international organization entrusted with governing rules of trade between nations. The objective of WTO is to assist producers of goods and services, exporters and importers to conduct their businesses smoothly and freely as possible. WTO deals with tariffs, barriers to trade and import licensing procedures, etc. Tanzania’s concern is mainly on access to market for its agricultural goods (Mwalimu, 2003a).#p#分頁標題#e#

 

WTO was found in 1995 after the Uruguay Round of negotiations and succeeded the GATT. 146 countries are members of WTO. The objective of WTO is to help producers and buyers of agricultural products to perform business smoothly without any hindrances with the ultimate objective of improving the conditions of citizens of member countries which have ratified the organization.

 

There are six areas in which Tanzania has put emphasis and priority in WTO agreements namely; agricultural products, defensive equipment, clothing and textile products, non-tariffs measures, special and differential treatments, trade defense instruments, and economic integration (URT, 2003a). Tanzania has also identified a few areas in which she has significant concerns.

 

These include: Trade Related Intellectual Property Rights (TRIPS), particularly their impact on health and related public goods issues (Mwalimu, 2003). For instance; availability of drugs to cure malaria, tuberculosis or prolong life of the HIV/AIDS patients. In Agriculture, the overall concern for Tanzania here is the European agricultural subsidy policy, sanitary measures, market access, and production technology methodology.

 

The WTO acts as an umbrella organization whose mandate is expanding free trade agreements. One of the main focuses of WTO is to counter the high level of tariffs and subsidies in the agriculture sector in developed countries. WTO has the vision that removing tariff barriers and subsidies could significantly boost the overall level of trade, lower prices to consumers and raise global economic growth through international trade (Hill, C. W, 2005).

 

4.2 Frameworks of WTO agreements

 

The following is a framework for WTO agreements:

 

Tariff cuts

 

Improvement in market access through tariff reductions from bound rates.

 

Single approach for all countries using formula to ensure equality.

 

Evaluation of current tariffs on sensitive products which are subject to a mix of tariffs.

 

Tariff rate quotas

 

Reduction in-quota tariffs and improves administration (as part of balance of concessions).

 

Safeguards

 

Establishment of new Special Safeguard Mechanism (SSM) for developing countries.

 

Special and

 

differential treatment

 

for developing

 

countries

 

Proportionately less tariff reductions for developing countries with longer implementation period.

 

Designation of special products on criteria of food and livelihood security to get more flexible treatment.#p#分頁標題#e#

 

Full liberalization of trade in tropical products from developing countries.

 

Source: Josling (2005)

 

5.0 DETERMINANTS OF INTERNATIONAL TRADE

 

5.1 Trade before establishment of protocol

 

According to Langhammer (1992), the larger the share of intra-regional trade between member countries before establishment of a trade protocol, the more likelihood that trade protocols will result in growth of international trade. That is, if members of a regional trade protocol have been involved in international trade before the protocol, the more the chance that the trade protocol will become successful.

 

This fact suggests that regional trade protocols between neighboring countries are more likely to be successful compared to regional trade protocols between countries which don’t share a common border. However, Bhagwati (1992) argues that it is not necessary that countries that share a common border have successful trade relationships. There are other factors such as geo-strategic alliance and colonial links that determine trade flows.

 

5.2 Level of tariffs

 

Bhagwati (1992) also argues that the scope of regional trade is determined by level of tariffs. The lower the tariffs between partner countries, the greater scope for trade creation. Low tariffs between members lead to more efficient flow of trade between member countries. Additionally; the greater the difference in cost of production and efficiency in member countries, the greater the scope of international trade.

 

On the other hand, the higher the tariffs for non-members of regional trade protocols, the greater the potential international trade between member countries and the more benefits enjoyed by members due to international trade (Bhagwati, 1992). Also, the greater the memberships size of a regional trade protocol, the greater the scope for international trade among member countries.

 

5.3 Size of membership

 

Robson (1987) argues that the larger the membership of a regional trade protocol, the greater the potential for more international trade. Similarly, the broader the sectoral coverage of the regional trade protocols, the greater the possibility for more international trade among member countries. In regional trade protocols where trade is limited to certain sectors (e.g. agriculture), the volume of trade is also low.

 

5.4 Transportation costs

 

The higher the transportation costs among member countries in a regional trade protocol, the lower the volume of international trade between member countries (Langhammer and Hiemenz, 1990). Higher transportation costs between member countries discourage flow of trade because the costs add-up to the final price that consumers have to pay.#p#分頁標題#e#

 

5.5 Political harmony

 

The volumes of international trade between member countries in a regional trade protocol also depend on the state of political harmony between member countries. Since regional trade protocols require a great deal of talks, the existence of previous political harmony between member countries may contribute to much solid cooperation and hence more international trade (ibid).

 

5.6 Differences in level of income

 

Another determinant of international trade between members of a regional trade protocol is the differences in level of income between member countries. The level of income in a particular country tends to be correlated with the standard of living, and thus, the higher the difference in level of income, the higher the difference in standard of living, and the higher the potential for international trade due to comparative advantage (de Melo and Panagariya, 1992).

 

6.0 POSITIVE IMPACT OF REGIONAL TRADE PROTOCOLS

 

6.1 Attracting Foreign Investments

 

One of the benefits of regional trade protocols is that it helps to facilitate intra-regional investment flows among member countries. Additionally, regional trade protocols also help to facilitate foreign direct investments to member countries because investors perceive regional trade protocols to translate into larger markets and thus facilitate the enjoyment of economies of scale when it comes to production (Mwalimu, 2003a).

 

By investing in countries which are signatories of regional trade protocols, investors enjoy much higher return on their investments due to a larger market size and harmonized investment climate among member countries. For instance, EAC member countries have a common investment policy that serves an attraction to investors when it comes to investment incentives to prospective investors (Kweka, 2004).

 

6.2 Economic integration

 

Regional trade protocols are also a potential source for economic integration. By being a member of a regional trade protocol, a country can substantially benefit from economic gains. Both, economic theory and a vast body of empirical evidence point towards regional trade protocols as one of the strategies for a government to maximize national welfare (Balassa, 1976).

 

Regional trade protocols are also the best arrangement, and are at most a step towards the ideal of multilateral trade. The net benefits of regional trade protocols are measured relative to the initial starting point, rather than against the standard of multilateral free trade. Using this standard, regional trade protocols can be expected to lead to both static and dynamic gains (de Melo, et al, 1993).

 

However, the impacts of regional trade protocols depend on sizes of trade creation. Trade creation takes place when a member of a regional trade protocol switches from consumption of goods produced domestically to goods imported from a lower cost firm located in another member country. This results in relocation of resources such as labour and capital from one country to another (ibid).#p#分頁標題#e#

 

Regional trade protocols also benefits countries in which costs of production are less compared to other countries. For example, a manufacturer in one member country can consider moving production to a country where production costs are cheaper so as to make the products cheaper and thus more competitive for export. Thus, regional trade protocols help to stimulate exports, especially in countries with lower production costs.

 

6.3 Reduction of trade diversion

 

Regional trade protocols reduce trade diversion which occurs when a member country limits imports of low cost goods from outside and emphasizes on consumption of high cost goods produced within the country. Trade diversion is bad because it results in low standard of living and results in reduction in government revenue as imports from outside are limited (ibid).

 

6.4 Rise in competitiveness

 

Another impact of regional trade protocols is that they help local firms to become more competitive by first competing against each other regionally, and then compete globally. Regional trade protocols expose local firms to greater competition in regional markets, and hence help to improve their efficiency and effectiveness in production and marketing of their goods.

 

6.5 Specialization

 

Another positive impact of regional trade protocols among member countries is that it helps local firms to become more specialized in their production of goods by forcing them to concentrate on production of goods for which they have more competitive advantages. This results in expansion of the firms by catering for the needs of niche markets both, within and outside the region (Torre and Kelly, 1992).

 

6.6 Infrastructure development

 

Another impact of regional trade protocol is that it facilitates infrastructure development in areas of transport, communication and power infrastructure between member countries. Regional trade protocols can result in cooperation among member countries in the construction of connecting road, rail networks, and communication infrastructure and power lines (ibid)

 

6.7 Joint management of natural resources

 

Member countries may also benefit from regional trade protocols from joint management of natural resources (such as ocean or river fisheries). For instance, EAC member countries may benefit from joint management of resources available within the Lake Victoria basin by sparking of greater investment (from both inside and outside the region), and thus prevent depletion of resources for mutual benefits.

 

6.8 Global integration

 

Regional trade protocols are also beneficial to member countries because they serve as a stepping stone to much wider or global economic integration. For instance, Tanzania has opted to use the SADC umbrella to participate in WTO negotiations because according to WTO regulations, member countries are not allowed to participate as individual countries but as members of regional blocs.#p#分頁標題#e#

 

6.9 Collective bargaining power

 

Another benefit of regional trade is that it gives member countries collective bargaining power vis-à-vis against non-members in trade negotiations and thus improve their positions in international trade. According to Langhammer and Hiemenz (1990), by acting in concert, member countries of a regional trade protocol are better able to demand access to markets or to increase their voting power in international trade negotiations.

 

6.10 Increased commitment to trade

 

Regional trade protocols may facilitate member’s commitment to international trade. Regional trade protocols are likely to increase regional dialogue and discussion, which may help diffuse potential regional disputes, and engender mutual political support. Thus, regional trade protocols improve international trade by minimizing the incidences of potential conflicts that may harm international trade (Langhammer, 1992).

 

7.0 NEGATIVE IMPACTS OF REGIONAL TRADE PROTOCOLS

 

7.1 Dependence of Import Related Revenues

 

Another negative impact of regional trade protocols is that it makes countries dependent on import related revenues and also it makes member countries rely on commodities trade instead of production. Specializations due to regional trade protocols may result in lack of diversification of economic activities where by countries rely on few economic activities.

 

7.2 Decline of industrialization

 

One of the negative impacts of regional trade protocols is that it has resulted in a decline of industrialization especially in less industrialized countries. By allowing competition between countries with a narrow industrial base (e.g. Tanzania) and countries with a wider industrial base (e.g. South Africa), countries with a narrow industrial base will fail to compete and it’s industrial base shrink further Langhammer and Heimenz (1990).

 

7.3 Less economic gain

 

Regional trade protocols have been blamed for benefiting certain countries while short changing other countries. For each regional trade protocol, there are always losers and winners. Poor countries have always been the losers in regional trade protocols because of huge trade deficits and lack of competitive advantages. Countries that benefit from regional trade protocols are those with production advantages (ibid).

 

8.0 CONCLUSION

 

Conclusively, empirical evidence suggests that regional trade protocols have had little, if any, impact on intra-regional trade. Langhammer and Heimenz (1990), in their comprehensive survey, found no case in which regional trade protocols especially among developing countries resulted in any significant contribution to the growth of international trade or economic development.#p#分頁標題#e#

 

On the contrary, regional trade protocols between developed countries and developing countries have resulted in rapid growth of international trade. Such trade protocols between developed and developing countries include, AGOA, NAFTA and EU-ACP. There are several reasons for this different outcome. Torre and Kelly (1992) argue that trade creation is larger in more industrialized countries.

 

Also, this is because member countries in industrialized regional trade protocols are more integrated before the agreement. Also, industrialized countries have become more specialized and have thus gained competitive advantages against less industrialized countries which are less specialized. Since demand for more specialized products is less in poor countries, the volume of trade remains small (ibid).