Front Matter

Front Matter

Author(s):
Sanjeev Gupta, and Yongzheng Yang
Published Date:
September 2005
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© 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

Cataloging-in-Publication Data

Yang, Yongzheng.

Regional trade arrangements in Africa / Yongzheng Yang and Sanjeev Gupta—[Washington, D.C.]:

International Monetary Fund, 2005.

  • p. cm.

Includes bibliographical references.

ISBN 1-58906-439-9

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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Abbreviations

ACP

Africa, Caribbean, and Pacific

AEC

African Economic Community

AfDB

African Development Bank

AGOA

African Growth and Opportunity Act

ASEAN

Association of Southeast Asian Nations

ATC

Agreement on Textiles and Clothing

CEAO

West Africa Economic Community

CEMAC

Central African Economic and Monetary Community (formerly UDEAC)

CET

Common external tariff

CMS

Constant market share

COMESA

Common Market for Eastern and Southern Africa

CU

Customs Union

EAC

East African Community/Cooperation

EBA

Everything but Arms (EU)

ECA

Economic Commission for Africa (UN)

ECCAS

Economic Community for Central African States

ECOWAS

Economic Community of Western African States

EEC

European Economic Community

EFTA

European Free Trade Association

EPA

Economic Partnership Agreement (EU)

EU

European Union

FDI

Foreign direct investment

FTA

Free trade agreement/area

GATT

General Agreement on Tariffs and Trade

GSP

Generalized system of preferences

Mercosur

Common Market of the South

MFN

Most favored nation

NAFTA

North American Free Trade Agreement

NEPAD

New Partnership for Africa’s Development

NTBs

Nontariff barriers

OAU

Organization of African Unity

PRGF

Poverty Reduction and Growth Facility

Quad

Canada, the EU, Japan, and the United States

ROO

Rule of origin

RTA

Regional trade arrangement

SACU

Southern African Customs Union

SADC

Southern African Development Community

TIM

Trade Integration Mechanism

UDEAC

Central African Customs and Economic Union

VAT

Value-added tax

WAEMU

West African Economic and Monetary Union

WTO

World Trade Organization

Preface

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.

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