Uncertainty in Preferential Trade Agreements : Impact of AGOA Suspensions on Exports

This study examines the impact of the abrupt suspension of African Growth and Opportunity Actbenefits on exports from eligible African countries. The study uses a triple difference-in-differences estimationthat controls for both country- and product-level export changes. The results suggest that the suspension of theAfrican Growth and Opportunity Act has had a considerable negative impact on the level of exports to the UnitedStates. The impact appears to be bigger for countries with a high African Growth and Opportunity Act utilization rate.The suspension is associated with a 39 percent decline in exports to the United States. At the product level, thesuspension hurt apparel and textile exports, leading to a decline of their exports by about 88 percent. Understandingthe impact of withdrawing access to a nonreciprocal trade agreement is particularly important now, as the EuropeanUnion began negotiating Economic Partnership Agreements with African countries, as a sign of a shift to reciprocity; theUnited States is considering a similar path of negotiating free trade agreements with individual African countries.These developments underscore the need to prepare for a post–African Growth and Opportunity Act period with morereciprocity, as trade uncertainty is becoming rampant.