Measuring the Effects of Regional Trade Agreements in South Africa: A Comprehensive Review

There is strong evidence that regional trade agreements in force have caused South Africa to increase its aggregate trade with less efficient member countries at the expense of the more efficient ones. Using disaggregated data the European Union Free Trade Agreement has produced mixed results. Trade in goods classified as beverages/tobacco and manufactured goods (machinery and transport equipment, and miscellaneous manufactured articles) have been diverted from more efficient countries outside the regional trade agreements to less efficient member countries. This article finds evidence of trade expansion only for chemical products. The Southern Africa Development Community (SADC) has diverted trade from more efficient to less efficient member countries in all commodities. Regional trade agreements in South Africa (SADC and the European Union Free Trade Agreement) increase trade with less efficient partners by approximately 4% and 6%, respectively.