A highway across the Atlantic? Trade and welfare effects of the EU-Mercosur agreement

The African Continental Free Trade Area (AfCFTA) entered into force in May 2019 after surpassing the required 22 ratifications. This article combines the decision support model (DSM) and the Global Trade Analysis Project (GTAP) computable general equilibrium (CGE) model to make quantitative assessments of the expected welfare and trade effects of the AfCFTA on Nigerian and South African sectors possessing sustained export potential within the AfCFTA member states. By specifying two scenarios of AfCFTA membership, the simulation results reveal positive welfare gains for Nigeria (USD 146.12 million) and South Africa (USD 1.46 billion), originating from the GTAP sectors identified with sustainable export opportunities in the AfCFTA member states. The trade deal is also expected to be net-trade-creating, with a net trade of USD 2.15 billion at the global level. The assessments in this article are valuable in informing trade policy in light of core export competencies and the size, growth and consistency of the import demand in AfCFTA countries. It is also the first time elements of a product-level export market analytical tool are harmonised with a CGE model in the welfare and trade assessments of regional and/or bilateral trade arrangements. Policymakers and export promotion associations in both Nigeria and South Africa are recommended to utilise the results found in this article as a point of departure in leveraging the welfare-improving sustained export opportunities identified within the AfCFTA.

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“…CGE models [10,43,44] and partial equilibrium (PE) models [45][46][47] to assess the welfare and trade impacts of potential trade agreements.…”

Section: Empirical Understandingsmentioning

confidence: 99%

The Impact of AfCFTA on Welfare and Trade: Nigeria and South Africa in Light of Core Export Competences

Mhonyera

Meyer

2023

Sustainability

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“…The primary objective of ex-ante studies is to show the expected effects of the RTAs. The impact of Brexit (Jackson & Shepotylo, 2018;Oberhofer & Pfaffermayr, 2018;Nicita et al, 2019), Transatlantic Trade and Investment Partnership (TTIP) (Egger et al, 2015;Felbermayr et al, 2015;Ecorys, 2017;Bekkers & Romagosa, 2019), North American Free Trade Agreement (NAFTA) (United States-Mexico-Canada Agreement (USMCA)) , Regional Comprehensive Economic Partnership (RCEP) (Li & Moon, 2018), and RTAs of the European Union (EU) (Mayer et al, 2018;Timini & Viani, 2022) on signatory and non-signatory countries have been the main focus of ex-ante studies over the last few years. Some of these studies mention the possible impact of these RTAs on Turkey's trade and welfare level (Brakman et al, 2015;Egger et al, 2015, Felbermayr, 2015, Ecorys, 2017Nicita et al, 2019).…”

Section: Introduction and The Brief Overview Of Empirical Studiesmentioning

confidence: 99%

The Effect of Turkey's Free Trade Agreements (FTAs) on Its External Trade: Counterfactual Impact Analysis

SÖZBİR

2023

Fiscaoeconomia

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The study aims to estimate the impact of Turkey's FTAs on its average external trade level by three novel approaches, which are the fixed effects counterfactual estimator (FEct), interactive fixed effect counterfactual (IFEct) estimator, and matrix completion (MC) method introduced by Liu et al (2022). The results show that while Turkey's FTAs have a positive impact on Turkey's exports to the economies that Turkey has FTAs, we do not find any significant effect on its imports on average. The findings show that Turkey's FTAs has increased its exports to these economies by 54.7% on average over five years after the FTAs entered into force. Moreover, placebo test results signal that the impact of these agreements on Turkey's export might occur before the agreements entered into force. As far as we know, this is the first study considering the effects of FTAs on countries trade by counterfactual estimators introduced by Liu et al (2022).

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Geopolitical fragmentation and trade

Campos

Estefania-Flores

Furceri

et al. 2023

Journal of Comparative Economics

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A highway across the Atlantic? Trade and welfare effects of the EU-Mercosur agreement

Cited by 5 publications

References 62 publications

The Impact of AfCFTA on Welfare and Trade: Nigeria and South Africa in Light of Core Export Competences

The Impact of AfCFTA on Welfare and Trade: Nigeria and South Africa in Light of Core Export Competences

The Effect of Turkey's Free Trade Agreements (FTAs) on Its External Trade: Counterfactual Impact Analysis

Geopolitical fragmentation and trade

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