GTAP Resources: Resource Display
| GTAP Resource #7485 |
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"End of development-friendly trade policy: Could AGOA expiry harm Sub-Saharan Africa?" by Britz, Wolfgang, Zoryana Olekseyuk and Tim Vogel Abstract In times of uncertainty surrounding US trade policy, it is increasingly vital to secure a development-friendly approach toward African countries. They are among the most vulnerable to climate change, conflicts and pandemics, yet are also gaining geo-economic significance. Given the expiry of the US GSP in 2020 and the upcoming expiry of the African Growth and Opportunity Act (AGOA) in September 2025, Sub-Saharan African (SSA) countries urge policymakers to timely reauthorise and upgrade AGOA to improve market access to the US and ensure long-term support for sustainable development across the African continent. While the AGOA Renewal and Improvement Act of 2024 was introduced to Congress with bipartisan support, the election of Donald Trump and his “America First” approach have increased doubts about a (swift) extension of AGOA. This paper examines the potential effects of the expirations of GSP and AGOA using a multi-region CGE model. By simulating the shift from duty-free to MFN treatment, we find the following: Aggregated effects over all countries are rather muted while some specific countries face strong losses. Whereas bilateral exports of AGOA-eligible countries to the US decline by 3.7%, their total exports fall by only 0.1%, with real GDP remaining almost unaffected. Looking more closely, specific SSA countries would face high bilateral losses: The most substantial reduction of exports to the US occurs in Lesotho (-35%), Malawi (-25%) and Kenya (-16%), while welfare decline is the highest in Lesotho and Mauritius. The most affected sectors are sugar, wearing apparel, leather, dairy products, and beverages and tobacco. The limited aggregate effects of a loss in trade preferences are driven by relatively weak ties of SSA to the US and rather low US MFN tariff rates in the baseline. This highlights the limited effectiveness of the AGOA preference scheme, indicating that its renewal should go hand in hand with a comprehensive modernisation of the programme. |
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- Economic development - Preferential trading arrangements - Trade in textiles and wearing apparel - Partial and general equilibrium models - Africa (Central) - Africa (East) - Africa (North) - Africa (Southern) - Africa (West) - North America |
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Public Access  Paper (663.7 KB) Replicated: 0 time(s)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
