Regional Integration, Trade and Industry in Africa (Advances in African Economic, Social and Political Development)

This book examines the past, present and prospects of regional economic integration in Africa. The empirical analysis ranges from unions formed during the years following independence, to the proposed African Continental Free Trade Area (AfCFTA), which aims to remove trade barriers between all 55 African states. In addition, the book explores to what extent Africa’s Regional Economic Communities (RECs) have advanced in accordance with a linear integration model of goods, labor and capital markets. The book subsequently evaluates the suitability of the European model of deep integration with costly institutions for the conditions specific to Africa, considering, for example, the role of informal and non-recorded trade. Stylized cases of regional division of labour with increasing returns and imperfect competition are introduced to support the economic integration logic. Past and current economic policies in Africa are scrutinized to answer the question: how can African regions best foster new manufacturing industries and value chains across the continent? In conclusion, the book outlines content and processes of Common Industrial Policy in the African regions. The book also addresses the controversial issue of international trade agreements between developing countries and the European Union or the USA and investigates whether these agreements impede or promote economic development in Africa. The book includes a detailed roadmap describing how to improve key clauses of agreements for economic partnership in the interest of African countries. In closing, it outlines a new vision of joint sustainable development for Africa and Europe. Acknowledgements Regional Economic Integration in Africa: An Introduction Contents Abbreviations List of Figures List of Tables List of Textboxes Part I The Economic Regions in Africa 1 The State of the Unions 1.1 Regionalization and Regionalism—What Defines an Economic Region? 1.2 Empirics—the Panoply of Regional Organizations in Africa 2 The Logical Sequence of Regional Economic Integration 2.1 The Linear Model 2.2 Mind Your Steps 2.3 Optimal Monetary Unions? 2.4 Non-Tariff Measures 2.5 Defining Common Standards 2.6 A Simple Proposal to Amend the Linear Model 2.7 A Model to Follow in Africa? 3 The Reality of African Trade Integration—Challenges of Implementation 3.1 Domestication Issues 3.2 What is a Free Trade Area ? Global Standards in Use 3.3 The Logic of Exception and Exclusion 3.4 Bilateral Treaties in the Midst of Regional Communities 3.5 The Impact of REC Overlaps 3.6 Two Types of Customs Unions 3.7 Where African RECs Currently Stand—Key Indicators of Trade Integration 3.8 Informal Trade and Neighbourhood Effects 3.9 Contested Regions 4 Regional Integration in Trade Theory 4.1 Four Strands of Arguments 4.2 Trade Creation and Trade Diversion 4.2.1 Revisiting the Basics 4.2.2 Diagrammatic Treatment of Tariff Effects 4.2.3 The Developmental Case with Increasing Returns 4.2.4 Diagrammatic Treatment of South-South Communities 4.3 The Size of South-South Regional Markets 4.4 Concentration Effects in Regional Trade Agreements: Who Benefits? 4.4.1 Regional Trade with Complete Specialization 4.4.2 Regional Trade with Incomplete Specialization 4.5 Diversification and Specialization 4.6 Imperfect Trade in Homogeneous Goods 5 The Coordination Problem in Regional Integration 5.1 Irregularities to Overcome 5.2 Trade Facilitation as Remedy? 5.3 Light Integration as the Alternative? 6 On the African Continental Free Trade Area 6.1 Grand Projects of Africa-Wide Economic Integration 6.2 Critical Assessment of the CFTA Project 6.2.1 Building Block Logic—Yet a Good One? 6.2.2 Jumping over the Stumbling Blocks? 6.2.3 A Generic Solution to Liberalize Trade in Africa? 6.3 The Political Economy of Implementation 6.4 A Higher-Order Project of Regional Economic Integration 6.5 Fundamental Choices 6.6 Transformative/Developmental Regionalism? Part II Industrial Policy in the African Regions 7 A Fourfold Justification of Common Industrial Policy 7.1 The Twin Problem of Industry and Region 7.2 National Industrial Policies in the Region 7.3 Regional Imbalance and Divergence 7.3.1 Regionally Inclusive Industrial Growth 7.3.2 Regional Compensation Policies 7.3.3 Common Industrial Policy in African Regions 7.4 Regional Integration Versus Industrial Nationalism 7.5 Industrialization Strategy Implicit in Trade Policy 7.5.1 The Common External Tariff 7.5.2 Rules of Origin 7.5.3 Inter-Regional Trade Negotiations 7.6 The Sum of Arguments: Why Common Industrial Policy? 7.7 The Region as Political Lock-In Mechanism? 7.8 The Formal Status of Common Industrial Policy 8 Essentials of Common Industrial Policy 8.1 Design Principles of Industrial Policy in General 8.2 Regional Industrial Policy Design 8.3 Making Sense of Regional Industries 8.4 Networks and Lighthouses 8.5 The Incentive System 8.6 Locational/Spatial Policies 8.7 Conclusion: Easy Gains or Science Fiction? 9 Industrialization Strategies and Regional Actors 9.1 Regional Industrial Policies and Strategies 9.1.1 Case Study 1: West African Dairy Business—A Promising Regional Industry? 9.1.2 Case Study 2: Regional Textile Industry—A Mirage? 9.2 Conclusion: Sound Regional Strategies? 9.3 Financial Institutions in the African Regions 9.4 Regional Development Aid 9.4.1 Aid that Comes as ‘Private Sector Development’ (PSD) 9.4.2 The New ‘Private Sector Engagement’ 9.5 Regional Business Associations 9.6 A Very Short Summary of Common Industrial Policy Part III Global Dimensions of Regionalism 10 Shallow and Deep Integration 10.1 Global Trade Negotiations 10.2 Trade Deals Running and Trade Deals to Come 11 The EU-Africa Trade Agreements 11.1 Initial Country Configurations in Africa 11.2 Final Configuration and EU Preference Systems 12 The Content of Economic Partnership Agreements 12.1 Initial Critique 12.1.1 Case Study 3: The Chicken Saga 12.2 The Scope of the Final EPAs 12.3 The Trade-in-Goods Agreements 12.3.1 Policy Space in GATT/WTO and EPAs 12.3.2 The WTO Waiver 12.3.3 Standstill Clauses—The Unidirectional Mode of EPAs 12.3.4 The Market Access Offer 12.3.5 Impact Assessments of Trade Liberalization 12.3.6 The Structural Problem of the African Market Access Offer 12.3.7 Fiscal Losses from the Liberalization Schedule 12.3.8 Prohibition of Quantitative Restrictions 12.3.9 The Exclusion Lists of Sensitive Products 12.3.10 Trade Remedies: Anti-dumping, Countervailing and Safeguard Clauses 12.3.11 Infant Industry Protection 12.3.12 Export Duties 12.3.13 Case Study 4: Cashew Production and Mozambique's Export Tax 12.3.14 National Treatment, Local Content Rules and Public Procurement 12.3.15 Export Subsidies 12.3.16 Most Favoured Nation Treatment 12.3.17 Rules of Origin 12.3.18 Economic Sanctions—The Right of Non-execution 13 Final Assessment of the EU-Africa Trade Deals—Ways Out? 13.1 The Political Impasse 13.2 Grand Alternatives 13.3 Repair Work 13.4 New Areas for Strategic Dialogue 13.5 New Aid for Trade 14 Conclusion and Outlook 14.1 Conclusion—How to Achieve Africa’s Economic Unity 14.2 Outlook—Sustainable Prospects for Regions, Trade and Industry References