Building capacity to help Africa trade better

The tripartite Free Trade Agreement: A computer analysis of the impacts

Trade Reports

The tripartite Free Trade Agreement: A computer analysis of the impacts

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This paper examines the implications of the so-called tripartite countries of the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC) entering into a genuine Free Trade Agreement (FTA). We use the Global Trade Analysis Project (GTAP) latest pre-release Version 8 database to assess the welfare and trade gains from this FTA, as determined by duty-free merchandise goods access and with a small (2%) reduction in assumed non-tariff barriers to both merchandise goods and services barriers also factored in. Importantly, our simulation starts from the assumption that the three regional blocs of COMESA, EAC and SADC have their FTAs operating in a comprehensive manner in that all three have tariff-free trade within their blocs but not outside their blocs. Thus, our results relate to combining these three blocs into one large tripartite FTA.

The paper includes developments such as the implementation of the Trade, Development and Cooperation Agreement (TDCA), and, most significantly, the assumption that the Economic Partnership Agreements (EPAs) between all African countries except South Africa and the European Union (EU) will be implemented.

Our GTAP results are indicative only, but as we are using the pre-release Version 8 GTAP database with extensive African country disaggregation we feel that these results offer a very realistic view of the final outcome. They are, to coin a phrase, ‘the best game in town’, as the use of a model such as GTAP forces consistency and closure in the resource allocative process and GTAP is the international model of choice for trade analysis.

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.


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