Survey of AfCFTA Impact Studies with special attention given to the estimation and implementation of Non-Tariffs Measures (NTM)s from the agreements

Jane Karonga

No 333240, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Empirical studies on AfCFTA using both partial and general equilibrium models find overall welfare gains from combined tariff elimination accompanied by trade facilitation measures and reduction in non-tariffs measures (NTMs). Particularly, partial equilibrium approach indicates long run trade creation effect with the possibility of short run trade diversion. Overall, both partial and general equilibrium analysis observes that gains from the Agreement are expected to be distributed unequally among regions and countries due to differences in, inter alia, their economic sizes, levels of diversification of exports, infrastructures and levels of tariff revenue losses. Whereas, the research studies conclude that trade flows are significantly enhanced with the AfCFTA, they also highlight that the magnitude could be higher if tariff liberalization is coupled with removal of NTMs as part of the broader trade facilitation processes. Given that tariff levels are generally low for many African countries negotiating a deep FTA such as the AfCFTA due to existing regional FTAs, the largest impact in this agreement will most likely come from changes in NTMs and other flanking broad trade facilitation measures. Thus, the proper estimation of expected trade cost reductions associated with provisions on NTMs becomes a critical element for assessing the potential economic impacts of AfCFTA. Unlike tariffs, NTMs are not straightforwardly quantifiable, not necessarily easy to model, and information about them is hard to collect. In this paper, we provide a detailed overview of the different approaches used to calculate the trade cost reductions of NTM-provisions in the AfCFTA impact studies todate and their associated welfare effects. Furthermore, analysis of the varying sectors and regions, tariffs shocks/assumptions and other policy changes including scenarios and aggregation levels will be examined to provide critical analysis of the impacts of AfCFTA for informed policymaking.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:333240

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