at Urbana-Champaign. He is the author of Africa in the Global Economy (2000), Africa and the World Trade Organization (2009), and Economic Integration in Africa (2017).
Mshomba applied the "Page 99 Test" to his new book, Africa and Preferential Trade: An Unpredictable Path for Development, and reported the following:
Here are the two full paragraphs on page 99 [sources removed]:Learn more about Africa and Preferential Trade at the Stanford University Press website.The other countries in the Central African group have little to gain from an EU–Central Africa EPA. Chad, the Central African Republic, and São Tomé and Principe are LDCs with access to the [Everything But Arms] EBA program. São Tomé and Principe will be removed from the EBA program in 2024 when it graduates from the LDC category. However, merchandise exports contribute only 3–4 percent of São Tomé and Principe’s GDP. While 70 percent of those exports are destined to the EU, only about 30 percent of those are eligible for the EBA. The rest take advantage of the zero [Most Favored Nation] MFN rate, that is, the duty-free rate for everyone. It is unlikely São Tomé and Principe would sign on to an EPA just so that exports that contribute only one percent of its GDP would have duty-free access. Moreover, São Tomé and Principe is an insignificant market for the EU.Page 99 highlights some of the differences between African countries, but it does not capture the main point of the book, which is to caution countries on non-reciprocal preferential trade arrangements.
The Republic of Congo qualifies for the EU GSP program. Gabon and Equatorial Guinea do not qualify for the EU GSP because they are in the upper-middle-income category. For all these countries, more than 97 percent of their exports are raw minerals and other products that face zero MFN duties. In 2020, the last year that Equatorial Guinea could have taken advantage of being an LDC, it was not even able (or did not bother) to take advantage of its one percent of exports to the EU that was eligible for the EBA. Unless the EU is willing to give substantial financial aid to these others members of the Central Africa Group as an incentive to join, what is now referred to as the “EU–Central Africa (Cameroon) Economic Partnership Agreement” will, in effect, remain just the EU- Cameroon Economic Partnership Agreement for a long time.
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In this book Mshomba provides analysis on how African countries have or have not benefited from non-reciprocal trade arrangements with the European Union, the US, and China. Mshomba also presents a systematic analysis of Economic Partnership Agreements (EPAs) negotiations for each negotiating group in Africa by examining the specific features of countries in each group. He provides an in-depth discussion on why some countries have been quick to embrace EPAs while others have been ambivalent or outright against them.
According to a famous proverb, “give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.” Non-reciprocal preferential trade arrangements neither “give a man a fish” nor “teach a man how to fish.” Rather, they offer the promise of a market in which to sell one’s fish. That is, these arrangements encourage preference-receiving countries to “teach themselves how to fish” and to “go fishing on their own,” with the non-binding promise that they will have a market for the fish they are able to catch and sell.
Special and preferential trade arrangements provide opportunities for developing countries to expand their export sector and, potentially, grow their economies. But they are only opportunities. The utilization of these arrangements and the benefits derived from them depend on many factors, both external and internal. The magnitude of the margins of preference, the reliability of the preferences, and the rule-of-origin provisions are among the key external determinants. Internally, the domestic capacity to expand the production of exports depends on political stability, investment policies, access to credit, the quality and reliability of infrastructure, and opportunities for backward and forward linkages in production.
Warning against overreliance on preferential trade arrangements, Mshomba explains that these arrangements must be seen as a ‘borrowed” tool whose life span is not certain. Between 2015 and 2023, 18 African counties had been suspended from the U.S. African Growth and Opportunity Act for different periods of time. As such, long-term development cannot be made based on it without discounting its future. Of course, when available, these preferential trade arrangements can be used in conjunction with other development tools to expand and diversify the export sector and, in turn, be a source of economic development.
--Marshal Zeringue
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