Working Paper: CEPR ID: DP1012
Authors: Paul Collier; Jan Willem Gunning
Abstract: For Africa, a regional customs union is unlikely to realise net welfare gains (in the sense of trade creation dominating trade diversion) which cannot be attained through unilateral trade liberalization. Unilateral reform has often failed in Africa, however. A regional customs union tied to Europe with reciprocal free trade is likely to dominate unilateral liberalization in several ways. Most importantly, it would make trade liberalization credible and thereby easier to sustain.
Keywords: regional integration; trade liberalization; reciprocal discrimination; credibility
JEL Codes: F02; F13; F15; F36; O19; O55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Regional customs union tied to Europe (F15) | Sustained liberalization efforts in Africa (O55) |
| Regional reciprocal discrimination (J15) | Locking in trade liberalization (F13) |
| Participation in a regional scheme (R10) | Commitment to liberalization (F13) |
| Regional integration (F15) | Political easing of trade liberalization adoption (F13) |
| Substantial unilateral trade liberalization (F13) | Political feasibility of regional integration (F15) |