How Can Tariff Elimination and Trade Facilitation Affect East African Economies?

Abstract

The article assesses the potential economic implications of tariff elimination and trade facilitation (TF) in the context of the African Continental Free Trade Area (AfCFTA) agreement for East Africa. Using the most recent GTAP database and computable general equilibrium model, the article provides additional evidence on the socio-economic benefits of the ongoing trade integration process. The results show that the elimination of tariffs would improve economic dynamism in most sectors of activity and household consumption. However, the elimination of tariffs alone would not be sufficient to achieve a significant level of trade integration. From a policy perspective, although a gradual implementation of tariff elimination is more beneficial for the zone, the results highlight the relevance of combining tariff elimination with complementary TF reforms. These reforms amplify the socio-economic gain from the AfCFTA. JEL Codes: F13, F14, F15, E23, C68

Do Trade Agreements Enhance Bilateral Trade? Focus on India and Sri Lanka

“…To determine how the India-Sri Lanka trade agreement relates to trade complementarity theory, this research delves into the specifics of the agreement and assess whether it encourages the exchange of complementary goods and services. The agreement's provisions, such as tariff reductions or eliminations, non-tariff barrier reductions, and investment facilitation, should ideally facilitate the trade of complementary products [46]. For instance, if the trade agreement has provisions that reduce tariffs on IT services from India while simultaneously making it easier for Sri Lankan apparel and textile products to enter the Indian market, it aligns with the theory.…”