The trade effects of technical barriers on South Africa's orange exports

Abstract

ABSTRACTThe paper employs a gravity model to measure the trade effects of technical barriers in South Africa's major markets for oranges. The gravity model estimation is backed by a price-wedge framework that identifies technical barriers (equivalent to tariffs) that could be restricting South Africa's orange exports. The simulation of the gravity equation shows that removing technical barriers will have a 0.1% increase in South Africa's orange exports to the EU, suggesting that the growth potential of the EU market is somewhat limited by some additional factors such as low demand growth, and South Africa's diversion to higher-return markets. Nonetheless, reducing technical barriers still has a fairly significant impact on South Africa's other major markets, particularly China, the United States, Canada and Russia. This is an important result, not only because the analysis generally affirms the tightening of technical barriers in key markets, but also because the analysis unpacks the cross sectional idiosyncrasies of technical barriers across major export markets.