Global Agricultural Trade Liberalization and its Implications for Sub-Saharan Africa

Global Agricultural Trade Liberalization and its Implications for Sub-Saharan Africa

ByJ. Alexander Nuetah
Ministry of Finance and Development Planning Republic of Liberia
AERC Research Paper 350 African Economic Research Consortium, Nairobi August 2018, 35 pages

This paper analyzes the potential impact of agricultural trade liberalization on sub-Saharan Africa.

• It used the Agricultural Trade and Policy Simulation Model to estimate the potential effects of agricultural trade liberalization, mainly in the United States (US) and the European Union (EU), on the world market prices of agricultural commodities. 
• It then used the estimated price changes to assess the impact of these reforms on net-food importers as well as other sub-Saharan African countries that enjoy preferential trade agreements with the EU and the US. 

The results indicate that the world market prices of all commodities imported by Sub-Saharan Africa are expected to rise while the prices of the key export commodities of the region would either decline or remain unchanged. 

• Given that the prices of major food commodities are expected to rise, net food-importing countries will experience an increasing import bill, thus leading to welfare loss. 
• Major Sub-Saharan Africa sugar exporters who are beneficiaries of preferential agreements such as the EU Sugar Protocol and the US’s Africa Growth and Opportunity Act initiative will become losers as preferences are eroded due to global liberalization. 
• Thus, the region is expected to generally become a net loser from the current WTO reform modalities.

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