Tariff Preferences as a Determinant for Exports from Sub-Saharan Africa (original) (raw)

An Analysis of Terms of Trade and Tariffs of the Countries of Africa in the International Market

2008

Paper examines the terms of trade of African countries in relation to their tariffs and volume of trade. Results show that among African countries, Togo pays the most while Libya pays the least in the international market. A positive and significant correlation exists between net barter terms of trade and tariffs but not with volume of trade as percentage of GDP. Policy implications of these results are discussed.

DEVELOPMENT, TRADE, AND TARIFF NEXUS IN AFRICA: CHALLENGES AND CHOICES

Tariff and trade are exerting some impacts on countries’ development process, especially the African commodities oriented countries. The challenge is not ideological protectionism, rather international market interconnectivity with participation without compromising domestic investments. On the other perspective, the international market playing field is not flattened enough to induce development through trade as conventionally advocated. Hence, this paper empirically explored how the development process in Africa has fared in relation to trade and tariff using panel data techniques. First, the paper investigated the development of African economies in relation to the countries’ regional grouping –Central, East, North, Southern, and West Africa in the descriptive aspect. Secondly, in the empirical estimation aspect, the paper assessed RE and GMM estimates with a view to having efficient and reliable results. The results established, among others, that regions with higher level of domestic investment had higher values in development indicators. It was also found that domestic investment and labour played a more crucial role in Africa’s development process. The challenge noted was the fact that increased trade integration do not translate to increased development in Africa. The basic choice for African countries is to improve domestic investment and enhance their labour productivity, which are more crucial for development than trade and tariff. The findings above are germane in this era of global economic down-turn where countries need to rely on factors that are not easily influenced by external shocks.

A new geography of preferences for Sub-Saharan African countries in a globalizing trading system

Trade between developing countries, or South-South trade, has been growing rapidly in recent years following significant reductions in tariffs. However, significant barriers remain, and there is currently reluctance among many developing countries to undertake further reductions. In addition African countries and in particular least developed African countries are still marginal players in this reframing of geography of trade. The erosion of preferential access to Northern markets remains their major concern and the status quo in multilateral liberalization could be seen as a desirable scenario. This emphasis on developed countries markets, principally Europe and the US, is likely to represent a missed opportunity for African countries. Unless those countries are granted broader preferences by the European Union and other developed countries, especially in agriculture, significant gains would be obtained from trade preferences provided by other developing countries. To assess this we compare the potential effects of the removal of barriers on trade between African countries and other developing countries with the gains from developed country liberalization. A general equilibrium model containing information on preferential bilateral tariffs is used to estimate the impacts. The opinions expressed in this paper are those of the author and do not necessarily reflect the views of UNCTAD or its members. The designations and terminology employed are also those of the authors. Any citation of this paper should ascribe authorship to staff of UNCTAD Secretariat and not to UNCTAD. Most of developing countries concerns, and in particular Least Developed Countries (LDCs) concerns, appear to be North oriented although access to other developing countries markets appears to be much more limited. Indeed, looking at simple coverage at the tariff line level, around 70 per cent of the tariffs faced by developing country exporters are applied by other developing countries. Tariff peaks and tariff escalation are a major issue also in South-South trade relationships vi . In addition, whatever the deepness of trade liberalization negotiated at the WTO, the level of protection in many developing countries and LDCs will not be reduced significantly vii . This emphasis on Northern markets could represent a missed opportunity for developing countries viii . More attention should then be devoted to possibility and feasibility of trade preferences schemes among developing countries. This could contribute to soften the issue of the erosion of existing preferences schemes provided by developed countries. Developing countries preference schemes could also represent a powerful development instrument to be used in favour of LDCs.

The African Growth and Opportunity Act, exports, and development in Sub-Saharan Africa

2006

The African Growth and Opportunity Act (AGOA) is the flagship of US commercial and development policy with Sub-Saharan Africa. This paper looks at the impact of the trade preferences, the central element of AGOA, on African countries' exports to the US and puts them in the perspective of the development of the region. The paper finds that, while stimulating export diversification in a few countries, AGOA has fallen short of the potential impetus that preferences could otherwise provide African exporters. The impact of AGOA would be enhanced if preferences were extended to all products. This means removing tariff barriers to a range of agricultural products and to textiles and a number of other manufactured goods. There also needs to be a fundamental change in approach to the rules of origin. Given the stage of development and economic size of Sub-Saharan Africa, nonrestrictive rules of origin are crucial. For all countries in Africa, those that have and those that have not benefited from preferences, there are enormous infrastructure weaknesses and often extremely poor policy environments that raise trade costs and push African producers further away from international markets. Effective trade preferences (those with non-restrictive rules of origin) can provide a limited window of opportunity to export while these key barriers to trade are addressed. But dealing with the barriers is the priority.

Tariff protection, tariff escalation and African Countries: who are the real friends?

Tariff protection of the final sectors and tariff escalation are said to be among the major obstacles for developing countries to up-grade the value chain and enjoy the gains from trade. For this reason, these are key issues to analyse trade negotiations. In this paper we focus on the trade relations between nine (both LDC and non-LDC) African countries and some of the big world trade players: USA, China, India, Japan and EU. Our objective is to determine which importing country is offering the less adverse – in terms of obstacles faced by the exporting African countries to up-grade in the value chain – tariff structure. To this end, we perform two exercises. First we assess the effective rate of protection using a CGE model through GTAP and computing the OERP index (Anderson, 1998). Second, we evaluate tariff escalation using a number of measures. We compare the results from the two exercises showing differences and complementarities in the two analysis presented in the paper.

Rethinking Trade Preferences: How Africa Can Diversify its Exports

The World Economy, 2007

This paper argues that the contribution of trade preferences to economic development needs to be reappraised in light of the growth of globalised trade in manufactures. Trade preferences may be able to act as a catalyst for manufacturing exports, leading to rapid growth in exports and employment. To do so, preferences need to be designed to be consistent with international trade in fragmented 'tasks' (as opposed to complete products) and need to be open to countries with sufficient levels of complementary inputs such as skills and infrastructure. Recent experience with the African Growth and Opportunities Act shows that, in the right conditions, Sub-Saharan African countries have had large manufacturing export supply response to trade preferences.

The effects of US and EU preferences on African Exports

2014

This paper focuses on the effects of preferential trade agreements for African countries stemming from changes in trade patterns. It proposes methodological breakthroughs and critical innovations regarding the use of the gravity equation to estimate the changes in intensive margins of trade resulting from tariff reductions, as consequence of the EU and US preferential policies. Based on highly disaggregated 8digit data in a theoretically grounded gravity model framework, we use an explicit measure of preferential tariff margins allowing an accurate analysis of policies that often discriminate among products and countries.