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Do South-South Trade Agreements Increase Trade? Commodity-Level Evidence from COMESA

South-South trade agreements are proliferating: developing countries signed 70 new agreements between 1990 and 2003. Yet the impact of these agreements is largely unknown. In this paper, we focus on the static effects of South-South preferential trade agreements that take place through changes in trade patterns. We estimate the impact of the Common Market for Eastern and Southern Africa (COMESA) on Uganda's imports between 1994 and 2003. We use detailed import and tariff data at the 6-digit Harmonized System level for over 1,000 commodities. Based on a difference-indifference estimation strategy, we find evidence--in contrast to aggregate statistics--that COMESA's preferential tariff liberalization has not considerably increased Uganda's trade with member countries, on average across sectors. The effect, however, is heterogeneous across sectors. Finally, we find no evidence of trade-diversion effects.

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Paper provided by Georgetown University, Department of Economics in its series Working Papers with number gueconwpa~06-06-03.

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Date of creation: 03 Jun 2006
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Handle: RePEc:geo:guwopa:gueconwpa~06-06-03
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