reduction must either be more efficiently undertaken regionally than say multilaterally or belong to costs categories that are incurred only regionally (i.e. on a geographical basis). The question of delivery of regional public goods is particularly relevant in this respect.

# _Realizing socially optimal economies of scale_

With many interventions and parties in the international transport of goods, and possibly the crossing of several borders, there is plenty of scope for cost duplication for trade operators. An important portion of these costs being fixed, eliminating any duplication will enable efficiency gains for firms, but also allow smaller scale operators to access export markets, an important aspect for developing countries.<sup>11</sup> Additionally, because some of the procedures and services that facilitate trade involve large fixed and possibly sunk costs, full economies of scale in the administrative procedures and services to international trade transactions may not be realized at the country level, especially in small and poor countries.

Duplication arises because similar requirements must be met repeatedly, but also because national rules differ, therefore also increasing search costs and associated uncertainty,<sup>12</sup> and creating further opportunities for rent seeking and corruption. COMESA’s regional carrier’s licensing system illustrates how duplication can be tackled. The regional license avoids having to pay for multiple licenses (Schiff and Winters, 2003: 81). Likewise, inspection of goods, if carried out in different places on each side of one border delays trade. Different national regulatory requirements force traders to meet two standards instead of one: in Tanzania registration requirements for agro-chemical pesticides are burdensome and subject to high fees, despite the fact that Tanzania’s market for such pesticides is small and equivalent and more efficient products are already registered and tested in neighboring Kenya (Tanzania DTIS, 2005).<sup>13</sup> Solutions to reduce duplication costs may involve harmonization, forming a common market within a customs union, mutual assistance among authorities (an important facilitating

> 11 World Bank (2005: 85) quotes for instance the cost of certification of organic nut production in Moldova for export to Germany which can amount to $18,000 per year, a not insignificant amount for firms in poor countries. 12 Arvis et al., 2007 examine the large impact associated with uncertainty along the supply chain created by non harmonised regulations.

> 13 The Tanzania certification and testing agency pesticides “... charges relatively high fees to register an agrochemical and also requires three years of field testing. It does not recognize the testing done and registration of chemicals in neighbouring countries, including Kenya. Hence, there are a broad range of newer, more effective and safer chemicals which do not get registered in Tanzania because of the high cost and which are prevented from being legally imported from Kenya or other neighbouring countries. The chemical registration revenue imperative of TPRI thus appears to take precedence over a feasible solution of mutual recognition of other (including more rigorous) testing and registration systems.”

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