The AfCFTA begins with the elimination of tariffs for 90% of the products traded and the rest will be done gradually. In this context, impact studies on trade and on economies are very useful in giving an idea of the extent of the changes that such an agreement could bring about at the economic level, as well as a means of informing public decision-makers.
Ex-ante assessments of trade liberalization between North African countries and the rest of the continent, within the framework of the AfCFTA, analyse production and value added by industry and by foreign trade. Therefore, these assessments address the effects of the creation and /or diversion of trade with African and non-African partners. It also analyses the impact of the agreement on the well-being of households, on the use and remuneration of factors, employment (skilled, medium-skilled, and unskilled labour) and the variation of relative prices. At the sectoral level, the assessments focus on the industrial sector by trying to know if the AfCFTA agreement will promote the integration of North African countries in Global Value Chains, in this case in the industrial sector, and what will be the effects and channels of transmission of this liberalisation in this sector.
For instance, Tunisia and Morocco’s ambition is to integrate further into GVCs and improve their integration rate to reap the benefits of AfCFTA and avoid problems related to rules of origin. The implementation of the AfCFTA agreement would allow, a priori, both the Tunisian and Moroccan industries to benefit from the entry of inputs at lower costs from the African continent and enhance their competitiveness to gain access to a large market. This intuition is backed by statistical data on intra-African trade which shows an increasingly important dynamic in terms of trade in manufactured goods.
“Whereas the AfCFTA could significantly boost intra-regional trade in Africa and promote economic growth, it can also entail costs, and its benefits may not be necessarily uniformly distributed between and within countries. Therefore, leaders often have legitimate concerns that further trade integration of their economies with those of other countries may benefit some industries and penalize others, may have negative effects on profits and employment prospects in some sectors and skill levels, and may reduce fiscal revenues” (IMF, 2019). This highlights the need to carefully assess the potential effects of the AfCFTA on growth and income convergence or divergence and the policies that should be put in place to maximize regional integration benefits and mitigate its negative effects on some countries.
Studies and impact assessments may have overstated the benefits of regional integration. Most have focused on trade integration—the benefits for countries in Africa from trading with each other, removing tariffs and using proxies for non-trade-barriers.
Regional—as opposed to global—trade integration has an upside and a downside. The upside is trade creation—the fact that the countries trade more—and the downside is trade diversion—countries trade within the trading bloc whereas it would be more efficient to trade with the rest of the world. More plainly, these commodity-dependent, low-income countries have little to gain from trading with each other because they produce nearly the same things.
Although there is no reliable method for the quantitative assessment of the dynamic effects of trade integration, dynamic effects appear to have a greater impact on economic processes than static effects because of their deeper scope. Moreover, in the African context where countries are at different levels of development, the appropriation of the dynamic gains resulting from regional integration is likely to be long in the relatively less advanced countries in view of the weakness of the institutions and the shortcomings present in the education systems.