The Effect of Regulatory Requirements on the Effectiveness of Cross-Border Clearance of Goods: Lessons from Selected Border Posts in Tanzania

Abstract

This study examined the extent to which regulatory requirements affected the effectiveness of cross-border clearance of goods at six  major border posts in Tanzania. Specifically, it assessed the effect of cross-border clearance procedures, the time spent by traders at  borders, the ease of getting cross-border permits and tax clearances, as well as corruption on the perceived effectiveness of clearance of goods at border posts. A survey of 944 cross-border traders was done to generate the data used to test the study hypotheses. The results  indicate that simplified cross- border procedures had a positive effect on the perceived effectiveness of cargo clearance. In  contrast, time spent at the border, difficulties in obtaining permits, the complex process of obtaining tax clearance, and corruption: all  had negative effects on the perceived effectiveness of cross-border clearance of goods. Furthermore, the positive influence of a simplified  procedure on the perceived effectiveness of cross-border clearance of goods was lower for firms that experienced procedural  delays than for those which did not experience this challenge. Accordingly, in the light of trade facilitation literature, we propose a collaborative approach of integrating border and behind-the-border processes to enhance the effectiveness of cross-border trade, and  hence reduce its cost.