Uncertainty in Preferential Trade Agreements

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.

Bibliographic Details

Main Authors:	Edjigu, Habtamu, Hakobyan, Shushanik, Kassa, Woubet
Format:	Working Paper biblioteca
Language:	English English
Published:	World Bank, Washington, DC 2023-05-01
Subjects:	AFRICA GROWTH AND OPPORTUNITY ACT (ACGOA), PREFERENTIAL TRADE AGREEMENT, EXPORT UNCERTAINTY, EXPORT DECLINE, FREE TRADE AGREEMENT, RECIPROCITY, APPAREL AND TEXTILE EXPORTS,
Online Access:	http://documents.worldbank.org/curated/en/099212404272329040/IDU0e80fbc010cd72049ca0a9560a77e6c4bf776 https://openknowledge.worldbank.org/handle/10986/39754
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