Uncertainty in Preferential Trade Agreements
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World Bank, Washington, DC
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This study examines the impact of the
abrupt suspension of African Growth and Opportunity Act
benefits on exports from eligible African countries. The
study uses a triple difference-in-differences estimation
that controls for both country- and product-level export
changes. The results suggest that the suspension of the
African Growth and Opportunity Act has had a considerable
negative impact on the level of exports to the United
States. The impact appears to be bigger for countries with a
high African Growth and Opportunity Act utilization rate.
The suspension is associated with a 39 percent decline in
exports to the United States. At the product level, the
suspension hurt apparel and textile exports, leading to a
decline of their exports by about 88 percent. Understanding
the impact of withdrawing access to a nonreciprocal trade
agreement is particularly important now, as the European
Union began negotiating Economic Partnership Agreements with
African countries, as a sign of a shift to reciprocity; the
United States is considering a similar path of negotiating
free trade agreements with individual African countries.
These developments underscore the need to prepare for a
post–African Growth and Opportunity Act period with more
reciprocity, as trade uncertainty is becoming rampant.
Palabras clave
AFRICA GROWTH AND OPPORTUNITY ACT (ACGOA), PREFERENTIAL TRADE AGREEMENT, EXPORT UNCERTAINTY, EXPORT DECLINE, FREE TRADE AGREEMENT, RECIPROCITY, APPAREL AND TEXTILE EXPORTS