Abstract:
The Southern African Development Community (SADC) displayed notable success in pushing for trade liberalisation through tariff reductions. This was achieved following the signing of the SADC protocol on trade in 1996. The implementation of the protocol commenced in 2000. About 85 % of intra-SADC trade was free of duty in 2008 and the Southern African Development Community Free Trade Area (SADC-FTA) was launched. Maximum tariff reductions were achieved in 2012. The main aim for SADC tariff reductions under the trade protocol was to improve intra-SADC trade. However, this is not what happened, since the relationship between tariffs and trade was not inverse as assumed. The response of intra-SADC agricultural trade to tariff liberalisation was disappointing. This study investigated why there has been lack of trade improvement, even though tariff liberalisation has been achieved in SADC. The study, however, is limited to a focus on the meat trade between SACU countries and Zambia. The trading partners were selected for the study since they all displayed substantial progress in implementing their tariff liberalisation commitments under the SADC protocol on trade. The meat trade was chosen for this study due to the importance of livestock to the people of these countries. Prior assessments of trade statistics revealed that the meat trade between SACU countries and Zambia has remained very low, notwithstanding tariff liberalisation. As a result, the main objective of the study was to investigate why there has been little improvement in the meat trade between these countries following tariff liberalisation. It is documented in the trade literature that the continuous decline in tariffs prompted the use of non-tariff measures (NTMs) in regulating trade. This study investigated if NTMs contributed to low levels of meat trade between the trading partners. In particular, the study examined the impact of NTMs on the meat trade between SACU countries and Zambia over the period 2001 to 2013. The study also examined the impact of GDP per capita and meat production volumes. The gravity model was preferred for this study, based on the model?s outstanding achievements when explaining bilateral trade relationships. Due to the prevalence of zero trade observations, the study used the Heckman sample selection model to estimate the gravity equation. The estimation model was chosen due to its exceptional capability in dealing with zero trade observations as well as sample selection bias. The results confirmed the observation that the relationship between tariffs and trade in meat is not inverse, as expected. It found a statistically insignificant relationship, further confirming the fact that tariff liberalisation had not influenced improvement in meat trade between the trading partners. The study found a statistically significant, negative effect of NTMs on meat trade. As a result, the study concluded that NTMs contributed to low meat trade between SACU countries and Zambia. The results found a positive and statistically significant relationship between GDP per capita and meat trade, and a negative and statistically significant relationship between meat production volumes and trade.
