101. The Effect of the African Growth and Opportunity Act (AGOA) on African Exports to the U.S.
- Author
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Mueller, Tina F.
- Subjects
- *
ECONOMIC development , *STATICS & dynamics (Social sciences) , *ECONOMIC policy , *EXPORTS - Abstract
The proliferation of preferential trade agreements (PTAs) has made it increasingly important to determine their effects on trade flows. At the center of the debate over the impact of these agreements are the questions of whether they are trade diverting or trade creating (Rahman et al 2006) and whether they are on balance trade-liberalizing or protectionist (Krueger 1999). Goldstein et al (2007) find the impact of nonreciprocal PTAs to be negative, contradictory to the underlying goals for such agreements. This paper seeks to further test this and other studies that have found a negative relationship between nonreciprocal trade agreements, preferences, and trade using a recently implemented non-reciprocal trade agreement between the U.S. and Sub-Saharan Africa, the African Growth and Opportunity Act (AGOA) of 2000. The AGOA seeks to promote trade, investment, and economic cooperation between the U.S. and AGOA countries by offering 36 eligible African countries duty-free access for most goods, providing coverage for additional commodities above and beyond those covered under the Generalized System of Preferences (GSP). U.S. non-oil imports under the AGOA have become the largest category of trade for eligible countries. A traditional gravity model is employed to test whether the AGOA is trade creating for eligible countries targeting the U.S. market. The findings of this study suggest that AGOA membership or eligibility for AGOA textile benefits have no significant impact on trade. The uncertainty of the life span of preferences, eroding preferential margins, and the inability for African producers to respond adequately to preferences are theoretical explanations for these results. The importance of this paper is to advance our understanding of the effect of PTAs, specifically those between a major economic power and less developed countries at a time when preferences are eroding yet remain at the center of debate in the current Doha Round. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]
- Published
- 2008