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Document Type

Original Article

Subject Areas

African Trade

Keywords

African Continental Free Trade Area, tariff elimination, trade and welfare impacts

Abstract

This study investigates the potential impacts of the African Continental Free Trade Agreement (AfCFTA) on production and trade in six selected African countries, namely Côte d’Ivoire, Egypt, Guinea, Mozambique, Tunisia and Uganda. In order to estimate the potential long-term effects of the agreement on these countries, the study uses the computable general equilibrium model developed by the Global Trade Analysis Project (GTAP) considering two alternative scenarios: full tariff elimination and partial liberalization. The total GDP of the six countries are expected to be affected at different rates. Overall, countries with a higher initial level of protection tend to see a higher benefit from being part of a regional trade agreement due to the elimination of high barriers. Countries with more liberal trade regimes and greater openness tend to experience relatively lower welfare benefits resulting from the further liberalization of trade. Gains would be higher if supplemented with additional trade reforms, where trade facilitation and capital mobility would significantly boost the gains. However, structural adjustment costs and associated social tensions may be higher in countries with greater ex-ante protectionism.

Receive Date

03/08/2022

Accept Date

14/11/2022

Publication Date

2023

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