- Sanjeev Gupta, and Yongzheng Yang
- Published Date:
- September 2005
© 2005 International Monetary Fund
Production: IMF Multimedia Services Division
Typesetting: Alicia Etchebarne-Bourdin
Cover Design: Martine Rossignol-Winner
Photo Credit: Andrew Burke/Lonely Planet Images
Regional trade arrangements in Africa / Yongzheng Yang and Sanjeev Gupta—[Washington, D.C.]:
International Monetary Fund, 2005.
Includes bibliographical references.
1. International trade—Africa. 2. International Monetary Fund. I. Gupta, Sanjeev. HF3874.Y35 2005
Disclaimer: The views expressed in this work are those of the authors and do not necessarily represent those of the IMF or IMF policy. The IMF has not edited this publication. Some documents cited in this work may not be available publicly.
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Africa, Caribbean, and PacificAEC
African Economic CommunityAfDB
African Development BankAGOA
African Growth and Opportunity ActASEAN
Association of Southeast Asian NationsATC
Agreement on Textiles and ClothingCEAO
West Africa Economic CommunityCEMAC
Central African Economic and Monetary Community (formerly UDEAC)CET
Common external tariffCMS
Constant market shareCOMESA
Common Market for Eastern and Southern AfricaCU
East African Community/CooperationEBA
Everything but Arms (EU)ECA
Economic Commission for Africa (UN)ECCAS
Economic Community for Central African StatesECOWAS
Economic Community of Western African StatesEEC
European Economic CommunityEFTA
European Free Trade AssociationEPA
Economic Partnership Agreement (EU)EU
Foreign direct investmentFTA
Free trade agreement/areaGATT
General Agreement on Tariffs and TradeGSP
Generalized system of preferencesMercosur
Common Market of the SouthMFN
Most favored nationNAFTA
North American Free Trade AgreementNEPAD
New Partnership for Africa’s DevelopmentNTBs
Organization of African UnityPRGF
Poverty Reduction and Growth FacilityQuad
Canada, the EU, Japan, and the United StatesROO
Rule of originRTA
Regional trade arrangementSACU
Southern African Customs UnionSADC
Southern African Development CommunityTIM
Trade Integration MechanismUDEAC
Central African Customs and Economic UnionVAT
West African Economic and Monetary UnionWTO
World Trade Organization
Trade policy is a critical component of an effective strategy for reducing poverty and boosting growth in Africa. In recent years, however, African policymakers have increasingly resorted to regional trade arrangements (RTAs) as a substitute for broad-based trade liberalization. This trend has long-term implications for the effectiveness of trade policy as a tool for poverty reduction and growth.
This Special Issues paper examines the record of African RTAs in promoting trade and investment and explores policy measures that may help improve the RTAs’ performance. The paper concludes that African RTAs have been generally ineffective in promoting trade and foreign direct investment. Relatively high external trade barriers and low resource complementarity between member countries limit both intra- and extraregional trade. Small market size, poor transport facilities, and high trading costs make it difficult for African countries to reap the potential benefits of RTAs. To increase regional trade and investment, African countries need to undertake more broad-based liberalization and streamline existing RTAs, supported by improvements in infrastructure and trade facilitation. Early action to strengthen the domestic revenue base would help address concerns over revenue losses from trade liberalization.
This paper was originally prepared, with input from Alexei Kireyev and Paolo Dudine, for an IMF Seminar on Trade and Regional Integration in Africa, held in Dakar, Senegal, December 6, 2004. The authors wish to thank the following for their helpful comments: Luis de Azcarate, Bergljot Barkbu, Anupam Basu, Ndiame Diop, Anne-Marie Gulde, Paul Heytens, Lawrence Hinkle, Chris Hoveka, Michael Keen, Padamja Khandelwal, Hans Peter Lankes, Arnold McIntyre, Jan Mikkelsen, Koffie Nassar, Michael Nowak, Arvind Panagariya, Gonzalo Pastor, Catherine Pattillo, Delpin Rwegasira, Liliana Schumacher, Arnim Schwidrowski, Chad Steinberg, and Stephen Tokarick. Vera Da Luz, Elisa Diehl, and Suresh Gulati provided excellent research and editorial assistance. Archana Kumar of the External Relations Department coordinated the production of this publication.