Impact of Regional/Preferential Trade Agreements

The document examines the role of regional and preferential trade agreements (RTAs/PTAs) in eliminating trade barriers, specifically discussing the African Continental Free Trade Area (AfCFTA) as the world's largest free trade area by membership. It explains the economic tension between 'trade creation', which improves welfare by shifting production to efficient members, and 'trade diversion', which can cause welfare losses by shifting imports from the most efficient global suppliers to preferential partners.

• The African Continental Free Trade Area (AfCFTA) is the largest free trade area globally in terms of membership, comprising 55 African countries and eight regional economic communities (RECs).
• The AfCFTA is intended to assist African nations in implementing domestic reforms and opening their economies to competitive market pressures at a sustainable rate, which facilitates their integration into the global economy and supports the multilateral process of trade openness.
• Economic welfare gains from preferential trade agreements occur through 'trade creation', where production shifts from inefficient domestic providers to efficient members of the agreement.
• Preferential trade agreements can lead to 'trade diversion', an inefficiency where imports shift from the most efficient global supplier to a country receiving preferential treatment, potentially causing welfare losses for both member and non-member countries.

APA

Chipanda, B., & Cilliers, J. (2026). Impact of Regional/Preferential Trade Agreements. Institute for Security Studies. https://futures.issafrica.org/thematic/guide.pdf?thematic=08-afcfta&topic=02-impact-of-regional-trade-agreements

Chicago

Chipanda, Blessing, and Jakkie Cilliers. Impact of Regional/Preferential Trade Agreements. Institute for Security Studies, 2026. https://futures.issafrica.org/thematic/guide.pdf?thematic=08-afcfta&topic=02-impact-of-regional-trade-agreements.

Wikipedia

{{cite report |last1=Chipanda |first1=Blessing |last2=Cilliers |first2=Jakkie |title=Impact of Regional/Preferential Trade Agreements |publisher=Institute for Security Studies |date=29 March 2026 |url=https://futures.issafrica.org/thematic/guide.pdf?thematic=08-afcfta&topic=02-impact-of-regional-trade-agreements |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{chipanda2026impact, author = {Chipanda, Blessing and Cilliers, Jakkie}, title = {{Impact of Regional/Preferential Trade Agreements}}, institution = {Institute for Security Studies}, year = {2026}, month = mar, url = {https://futures.issafrica.org/thematic/guide.pdf?thematic=08-afcfta&topic=02-impact-of-regional-trade-agreements}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }