- 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 Pacific
African Economic Community
African Development Bank
African Growth and Opportunity Act
Association of Southeast Asian Nations
Agreement on Textiles and Clothing
West Africa Economic Community
Central African Economic and Monetary Community (formerly UDEAC)
Common external tariff
Constant market share
Common Market for Eastern and Southern Africa
East African Community/Cooperation
Everything but Arms (EU)
Economic Commission for Africa (UN)
Economic Community for Central African States
Economic Community of Western African States
European Economic Community
European Free Trade Association
Economic Partnership Agreement (EU)
Foreign direct investment
Free trade agreement/area
General Agreement on Tariffs and Trade
Generalized system of preferences
Common Market of the South
Most favored nation
North American Free Trade Agreement
New Partnership for Africa’s Development
Organization of African Unity
Poverty Reduction and Growth Facility
Canada, the EU, Japan, and the United States
Rule of origin
Regional trade arrangement
Southern African Customs Union
Southern African Development Community
Trade Integration Mechanism
Central African Customs and Economic Union
West African Economic and Monetary Union
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.