The effects of the European Union's and China's trade agreements on Africa's exports

Empirical studies have shown that trade agreements have different effects on countries based on their level of development, especially in trade potentials. There have been several trade agreements between North-South and South-South countries, which are accompanied with different outcomes based on output, macroeconomic stability and compliance with the agreements reached. This study evaluates the effects of Africa's trade agreements with the European Union (EU) and China on Africa's exports. This study found that trade agreements in both trade relations have not brought any significant increment to Africa's exports and that more market access conditions exist in South markets than in the North markets

Mapping agricultural trade within the ECOWAS : structure and flow of agricultural products, barriers to trade, financing gaps and policy options. A research project in cooperation with GIZ on behalf of BMZ

This study reviews the structure and flow of formal and informal agri-food trade within ECOWAS and evaluate the trade barriers, financial and quality infrastructure gaps. A mixed-method approach qualitative and quantitative methods is adopted which comprises an extensive literature review, analysis of available statistical data on formal and informal trade and trade barriers, a field survey, expert interviews and workshops. The intra-ECOWAS agri-food trade is still at the low level with most of the traded agri-food commodities largely without value addition and characterised by inadequate diversification of the export base. A preponderance of informal agri-food trade along both the formal and informal trade corridors are detected. Livestock, oilseeds, cottonseed, nuts, cocoa beans, cereal, cassava, fisheries, fruits and vegetables were the most traded agri-food commodities, which were not given any concession of passage or facilitated across the borders despite the perishability of the commodities. Agri-food trade flows in the ECOWAS are largely hampered by the heterogeneous trade policy measures across the Member states. This is often a barrier to trade and tend to increase trade costs and commodities prices, thereby constraining the regional trade benefits to the people while also making the trading countries uncompetitive. Women agri-food traders were often exploited and harassed by the different borders officials. More so, the low intra-ECOWAS trade in agricultural and food products is due to the low production capacities, which among others are due to the inadequate finance, poor quality infrastructure soft (trained inspectors, customs procedures digitalisation, certification, etc) and hard (metrology facilities, roads, ports facilities, testing and inspection laboratories, etc.). Agricultural trade finance has been identified as one of the key challenges inhibiting trade in agricultural commodities in this subregion. Strategic policy options to promote agri-food trade within ECOWAS are provided

The Issues of Zero Values in Trade Data and Modelling

International trade provides a channel with which the interaction, integration and partnership of countries can be attained and/or established. Despite the relevance of trade to national, regional and global economies, the documentation of these economic activities is sometimes inadequate such that it brings to question the validity of the generated data. Empirical scholars often find it difficult to analyze trade statistics with zero-trade values, especially in terms of finding natural logarithm. Researchers often deal with the zero trade statistics by employing the truncation method or censoring method. However, this has consequences for empirical analysis and policy formulation because there is information in the zero-value trade that will be lost if they are truncated from the dataset. Hence, the main challenge in the literature is the issue of the most appropriate and efficient empirical strategy for solving the problem of zero-trade values among available options. This has led to controversy in the literature with several proofs and reproofs, actions and reaction as well as counter-reaction. It is on this basis that this paper is situated to review the raging controversy on the solution to the consideration of zero values in trade statistics as applicable to positive trade analysis and/or modelling. 

The Issues of Zero Values in Trade Data and Modelling

International trade provides a channel with which the interaction, integration and partnership of countries can be attained and/or established. Despite the relevance of trade to national, regional and global economies, the documentation of these economic activities is sometimes inadequate such that it brings to question the validity of the generated data. Empirical scholars often find it difficult to analyze trade statistics with zero-trade values, especially in terms of finding natural logarithm. Researchers often deal with the zero trade statistics by employing the truncation method or censoring method. However, this has consequences for empirical analysis and policy formulation because there is information in the zero-value trade that will be lost if they are truncated from the dataset. Hence, the main challenge in the literature is the issue of the most appropriate and efficient empirical strategy for solving the problem of zero-trade values among available options. This has led to controversy in the literature with several proofs and reproofs, actions and reaction as well as counter-reaction. It is on this basis that this paper is situated to review the raging controversy on the solution to the consideration of zero values in trade statistics as applicable to positive trade analysis and/or modelling. 

Specification and estimation of gravity models : a review of the issues in the literature

The gravity model has become an efficient tool in the analysis of international economic relations due to its theoretical derivation and ability to explain these relationships. The contending issue now is the appropriate specification and estimation techniques. This paper presents a review of current controversy surrounding the specification and estimation of gravity model with zero trade data, which we called ‘gravity modeling estimation debate’. Different positions in the literature were enunciated with the view of bringing the readers to the frontier of knowledge in this area of empirical strategies revolving on the gravity modeling in the presence of zero trade. By and large, the identification of the most appropriate estimation technique in the presence of zero trade is still an empirical issue. This paper deduced that the choice of the estimation technique should largely be based on the research questions, the model specification and the choice of data to be used for the analysis

The Distributional Effects of ECOWAS Common External Tariffs in a Rich Country with Poor People

The importance of Nigeria’s economic integration with the rest of the world cannot be overemphasized. The integration of developing countries into global market offers the opportunity and potential for rapid growth and reduction in poverty. Nigeria is endowed with abundant natural resources, especially crude oil, from which it derives over 90% of its foreign earnings. The country has been experiencing an average growth rate of around 7% during the last 5 years. However, this economic growth has not trickled down to the majority of the population reinforcing the condition of Nigeria as a rich country populated by poor people. Unemployment rate is increasing and has reached 24% in 2011 (NBS, 2013) and the share of population living below the poverty line has increased from 43% in 1985 to 55% in 2004 (World Bank, 2013). Explaining this situation requires a careful analysis of the government policies and their effects. This study will focus in particular on the trade dimension and analyze the impact on households’ welfare of the adoption of Economic Community of West African States’ Common External Tariffs (ECOWAS-CET). In its attempt to further integrate the economy to global market, particularly in the ECOWAS sub-region, Nigeria in 2005 committed itself into adopting ECOWAS’ CET, which reduces tariff rates from 0%-150% to 0%-50% during the transition period of 2006-2007. These tariffs stand as ECOWAS MFN rates to non-member countries and are part of the trade liberalization scheme (TLS) aimed at enhancing the sub-regional trade integration. ECOWAS’ CET establishes four tariff bands, namely 0% for social and necessities, 5% for raw materials, 10% for intermediate goods and 20% for finished goods that are not produced locally. Nigeria was granted the possibility of adding a fifth band of 35% for finished goods manufactured locally. The adoption of CET will have different effects on Nigeria’s households depending on whether the households are net consumer or ..

The European Union sanitary and phytosanitary measures and Africa’s exports

Changes in tastes and preferences in importing countries as well as the need to keep the environment safe, especially in developed markets, has contributed to a rising trend in the demand for sanitary and phytosanitary measures for quality products. However, the stringency and the preponderance of these measures have effects on trade, particularly for the developing and least developed countries in Africa. The effects often influence the attainment of the development aspirations of these Africa countries, especially employment, poverty reduction and sustainable growth. To this end, this study investigates the export effects of the EU standards for Africa. It uses the two-step Helpman et al. (2008) extensive and intensive trade margins model for two high-value foods and two traditional products. The EU standard requirements for each product are called the ‘hurdle to pass’ before the product can gain access to the EU market. In all, 52 African countries are considered in an empirical analysis covering the period 1995 to 2012. The study finds that product standards for fish and cocoa are trade-enhancing at the extensive margins, but this is not the case at the intensive margins. However, the standards are trade-inhibiting at both the extensive and intensive margins of exports for vegetables, while the standards are trade-restrictive at the extensive margins and trade-enhancing at the intensive margins for coffee. Thus, the findings suggest that the impacts of standards on exports are commodity-specific due to the significant differences in the costs of compliance, the size of the exporting firms or countries, access to development assistance and the commodity-specific interests of countries. The study recommends development partnerships and alliance policies on the part of Africa, with the development of institutions that can improve the level of standard-compliance in all African exporting markets

Standards and Food Exports in a South - North Trade: Evidence from the ‘Hurdles to Pass’ for High-Value Products

The continuous reduction in tariffs due to trade negotiations and agreements among trading partners have brought into fore the importance of the use of non-tariff measures (NTMs) in regulating the flow of trade. The incidences of NTMs have been increasing in the past decades. Technical barriers to trade (TBT) such as technical regulations and standards stand out among other NTMs because of its importance, in terms of product quality assessment and human, animal and environmental safety requirements. Also, its ability to be used for trade protectionism and enhancement of trade flows through quality products that meet the changing taste and preferences of consumers. To many developing and least developed countries, technical regulations, especially standards are trade restrictive such that it added to the series of costs faced by their exporters, particularly in the developed markets, which in fact can almost double the trade barriers effects imposed by tariffs for some products. This has implication for developing countries’ export earnings, income and in turns their quest for sustainable development through reduction in poverty, unemployment and smallholder producers’ inclusiveness in the trajectory of development. In reality, there are many standard requirements before a product could access any market. Most of the studies in this area often used single standard requirement, however, this study departs from these previous studies by considering all the applicable standards for the selected products, which is called the ‘hurdles to pass’ (HTP) prior to accessing the EU market. To this end, this study investigates the impact of EU standard requirements on Africa’s food exports. A two – stage Heckman gravity model specification was adopted using mostly unexploited standards data from the Perinom database. Two high value commodities were selected, fish and vegetable, at HS-4 digit level. The findings show that at the extensive margins of export, standards are trade enhancing in fish, while inhibiting the volume of export vegetable. Similar results were obtained at the intensive margins of exports where standard requirements did not constitute restriction to fish export; however, they hindered the flow of vegetable. Thus, this study finds that product standards in fish are trade inhibiting at the extensive margin but trade enhancing at the intensive margins of exports, however, standards at the extensive margins of vegetable export are trade enhancing, while trade inhibiting at the intensive margins. Therefore, I conclude that the impact of standards on trade is productspecific. Hence, Africa must ensure adequate standards compliance not only in the EU market, but in all its markets in order to reduce the cost of border rejections at both the extensive and intensive margins. Thus, as matter of importance, African countries’ agricultural policy agenda must include partnership with international institutions in order to support and assist in improving technology for standards compliance