The potential of African trade integration – Panel data evidence for the COMESA-EAC-SADC Tripartite

ABSTRACT

The COMESA-EAC-SADC Tripartite FTA, formed in 2011, is supposed to be a milestone towards Africa's continental trade integration. This study analyzes the impact of regional integration among the Tripartite countries on their bilateral imports before that date to evaluate the latest integration efforts. We estimate an extended gravity model on a large panel of 51 African countries using yearly observations from 1995 to 2010. We proxy existing formal trade barriers by sample average tariff data on imports from the world as well as indicator variables for the membership in regional FTAs. We consider different estimation techniques and discuss distinct sets of fixed effects. The PPML regression results indicate that remaining tariffs are significantly negatively correlated with imports throughout the preferred multiplicative models. An FTA status does not show a clear-cut import enhancing effect. In the specifications that control for country-year effects, the EAC coefficient is positively correlated with imports, and the COMESA and SADC FTA membership show a positive relation to imports within some reduced-sample robustness checks.     

The Role of Trade Policies in Building Regional Value Chains – Some Preliminary Evidence From Africa

Regional value chains (RVCs) are considered as an important step towards greater integration into global value chains (GVCs), but African countries trade very little value added with each other. Based on the UNCTAD‐Eora GVC database, this paper estimates a panel model from 2006 to 2012 for 37 African countries and sheds light on the role of trade costs in building RVCs in Africa. First evidence is provided for a significantly negative effect on foreign value added of charged tariffs on capital goods and higher time to trade. In addition, higher regulatory quality and a stronger telecommunication infrastructure seem to be positively correlated with a country's ability to participate in RVCs.     

The Aftermath of Anti-Dumping: Are Temporary Trade Barriers Really Temporary?

A consistent finding in the literature is that anti-dumping (AD) acts as a significant barrier to bilateral trade, in particular, during the time such measures are in force. Adding to a relatively scarce empirical literature, however, we identify adverse impacts of AD which survive well beyond its revocation. More specifically, while we cannot rule out a slight post-revocation recovery, we find empirical evidence that once affected bilateral trade does not fully recover on average following revocation. We use panel data at the Harmonized System four-digit (HS4) level of aggregation to produce these results and show that they are robust to the duration of AD cases, the time of their imposition and revocation, differentiation by economic sector and the nature of imposing countries. Several explanations for our observed empirical results seem plausible, and we provide a theoretical framework which suggests our results could be driven by market exit or underinvestment of targeted firms.