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Abstract

This paper provides a comprehensive and cohesive analysis of the likely effects of a Continental Free Trade Agreement (CFTA) in six African countries. Our analysis considers four incremental liberalisation scenarios. The first scenario consist in the elimination of tariffs for agricultural goods. In the second scenario we add the elimination of tariffs on manufactured goods. The third scenario adds a fifty percent reduction in NTMs. Our last scenario considers also a thirty percent reduction in transaction costs associated with time. This last scenario helps to illustrate the important role complementary policies may play in the integration process. We find that the trade, growth and welfare gains for each African country as a consequence of the implementation of a CFTA would depend on the modalities of trade liberalisation. We also find that the CFTA would lead to asymmetric changes in trade patterns among African countries and within countries across sectors. Finally, we find that the short-run impacts of CFTA are generally very small while the long-run impacts are instead positive. However, there is heterogeneity in the welfare effects in a given country and across countries.

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