Publication:
Uncertainty in Preferential Trade Agreements: Impact of AGOA Suspensions on Exports

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Date
2023-05-01
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Published
2023-05-01
Author(s)
Edjigu, Habtamu
Hakobyan, Shushanik
Abstract
This study examines the impact of the abrupt suspension of African Growth and Opportunity Act benefits on exports from eligible African countries. The study uses a triple difference-in-differences estimation that controls for both country- and product-level export changes. The results suggest that the suspension of the African Growth and Opportunity Act has had a considerable negative impact on the level of exports to the United States. The impact appears to be bigger for countries with a high African Growth and Opportunity Act utilization rate. The suspension is associated with a 39 percent decline in exports to the United States. At the product level, the suspension hurt apparel and textile exports, leading to a decline of their exports by about 88 percent. Understanding the impact of withdrawing access to a nonreciprocal trade agreement is particularly important now, as the European Union began negotiating Economic Partnership Agreements with African countries, as a sign of a shift to reciprocity; the United States is considering a similar path of negotiating free trade agreements with individual African countries. These developments underscore the need to prepare for a post–African Growth and Opportunity Act period with more reciprocity, as trade uncertainty is becoming rampant.
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Edjigu, Habtamu; Hakobyan, Shushanik; Kassa, Woubet. 2023. Uncertainty in Preferential Trade Agreements: Impact of AGOA Suspensions on Exports. Policy Research Working Papers; 10424. © World Bank, Washington, DC. http://hdl.handle.net/10986/39754 License: CC BY 3.0 IGO.
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