A new geography of preferences for Sub-Saharan African countries in a globalizing trading system

Abstract

Trade between developing countries, or South-South trade, has been growing rapidly in recent years following significant reductions in tariffs. However, significant barriers remain, and there is currently reluctance among many developing countries to undertake further reductions. In addition African countries and in particular least developed African countries are still marginal players in this reframing of geography of trade. The erosion of preferential access to Northern markets remains their major concern and the status quo in multilateral liberalization could be seen as a desirable scenario. This emphasis on developed countries markets, principally Europe and the US, is likely to represent a missed opportunity for African countries. Unless those countries are granted broader preferences by the European Union and other developed countries, especially in agriculture, significant gains would be obtained from trade preferences provided by other developing countries. To assess this we compare the potential effects of the removal of barriers on trade between African countries and other developing countries with the gains from developed country liberalization. A general equilibrium model containing information on preferential bilateral tariffs is used to estimate the impacts