The AfCFTA in a changing trade landscape
The African Continental Free Trade Area (AfCFTA) is being negotiated in an evolving trade landscape. These “external factors” act as critical junctures in the political economy of the CFTA. They may offer windows of opportunity to speed up processes, alter political priorities or reshape the incentive environment for different AfCFTA stakeholders The Mega-regional trade agreements (MRTAs) threaten to have spillover effects for excluded countries, including many in Africa. The implications for Africa would be higher competition and erosion of preferences in MRTA markets resulting in trade diversion. Estimates find that if these agreements are implemented, Africa’s net exports would fall by $3 billion. There would also be further concentration of Africa’s exports in energy and mining. However, implemented in parallel with the MRTAs, the AfCFTA is found, in ECA modelling work, to substantially improve the outcomes for Africa, increasing intra-African exports by $27.5 billion. Moreover, the gain is estimated to benefit all African countries and to be especially beneficial to expanding Africa’s industrial products.
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