Working Paper Series no. 569: Mega-deals: What Consequences for sub-Saharan Africa ?

Abstract

The sub-Saharan African (SSA) countries are excluded from the mega-deals, free trade agreements (FTA) currently under negotiations between several large economies (European Union – United States, European Union - Japan, China-Japan-South Korea…). As Sub-Saharan African exports remain dependent on these large markets, sub-Saharan African countries could undergo important economic impacts. Using a dynamic Computable General Equilibrium Model (CGEM), we find that mega-deals would have a negative impact on the welfare of SSA countries. Regional integration strengthening limited only to the implementation of a “Tripartite” FTA gathering 26 African countries, might limit these losses but could not overcome them. A continental regional trade agreement (RTA) involving all SSA countries would slightly counterbalance the negative impacts of the mega-deals. We also show that openness of SSA countries towards Asia could be a potential solution to avoid trade diversion.

Houssein Guimbard and Maëlan Le Goff
September 2015

Classification JEL : F13, F15, O55

Keywords : International trade, Mega-deals, Africa