GTAP Resources: Resource Display
| GTAP Resource #7324 |
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"Moving from the African Continental Free Trade Area to an African Custom Union: A computable general equilibrium assessment" by Bouët, Antoine, Leysa Maty Sall, Stephen Karingi and Simon Mevel Abstract This study focuses on the effect of introducing a common external tariff for Africa. It provides empirical estimates for trade, growth, and welfare implications of moving from a realistic AfCFTA scenario to an African Customs Union, using EAC and ECOWAS official CET structures. In addition, for each tariff structure, we propose an optimal harmonised tariff with respect to the rest of the world, based on a grid search procedure, which creates a single external border for the entire continent. To assess the economic implications, we rely on the MIRAGE-Power multi-regional, multi-sector, dynamic computable general equilibrium (CGE) model and simulate the implementation of a custom union within a period of two years after the full completion of AfCFTA. Results show us that using EAC tariff structure, African member States would impose an average tariff of 30.0% on their imports from outside the continent, compared with 14.0% imposed if ECOWAS tariff structure is applied to non-African partners. Moreover, using ECOWAS and EAC initial CET structure, overall African trade is decreasing with the implementation of custom union: on average the African continent becomes more protectionist with an implementation of a CET as compared to the free-trade area under AfCFTA agreement. extra-African trade is decreased while intra-African trade is increased. The optimization of the WTO-compliant CET using GDP or welfare suggests the lowest level of protection that would lead to a full liberalization of intermediate goods at the continental level. However, we must be cautious because the effects on welfare will vary from country to country. In the optimal scenario, WTO-compliant based on GDP and welfare for the continent, intra-African trade is not expanding. Identifying the single best solution to define an optimal common external tariff would require us to make assumptions about relative roles of intra-African trade, tariff revenue and welfare in the agreement. |
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- Economic development - Non-Tariff barriers - Non-Tariff measures in services - Preferential trading arrangements - Dynamic modeling - Africa (Central) - Africa (East) - Africa (North) - Africa (Southern) - Africa (West) |
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Public Access No documents have been attached. Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
