Preferential Access to the United States and Manufacturing Export Performance: A Product-Level Analysis 71
Summary Findings Our main findings are as follows: • Regarding the average impacts across all beneficiary countries over the entire period following the US trade policy changes, the biggest boost from the AGOA to African countries’ exports was for apparel products, which benefited from the largest tariff preferences. But the GSP LDC also had a positive and significant impact on exports of other African products. • Estimating separate impacts of the AGOA, by year, we find that marginal impacts on African apparel exports grew sharply in the first years after AGOA but then leveled off after the end of the MFA quotas on apparel in 2005. This flattening could be a consequence of the erosion of preferences for African countries facing fiercer competition from the Asian giants in the US market. • The AGOA’s impact on apparel exports varied across the subregions of Sub-Saharan Africa. Countries in Central and West Africa saw little growth in exports. Countries in Southern Africa displayed a boombust pattern, with a stronger marginal benefit to exports in the first years followed by a decline after MFA was phased out. Countries in East Africa differed in terms of when growth took off, but some eventually saw sustained success, with large marginal impacts on exports starting in 2005. Overall, these findings suggest that the AGOA helped to increase African exports, but the poor performance of Central and West Africa and the delayed spurt in most East African countries demonstrate that preferential access was not sufficient for export growth. Other factors—namely, favorable domestic conditions—were necessary to benefit fully from preferential access. A preliminary exploration of the causes of the AGOA’s differential impacts across African countries hints at several reasons: First, low tariffs on own imports may help explain the initial success of Southern African countries because such regimes allowed easier access to imported inputs than did other countries, where duty-drawback and other schemes involved higher transaction costs. Second, the establishment of effective special economic zones may explain not only the success of Mauritius but also the recent success of Ethiopia. Third, exchange rate regimes, and overvalued exchange rates in particular, may explain the lost opportunities in West and Central Africa.
A Product-Level Perspective from Disaggregated Export Data The analysis in this chapter is based on a new, highly detailed database that we constructed by combining US trade data from the US Census Bureau with tariff data published by the USITC. This database—the US Trade and Market Access Database—is described briefly in the following paragraphs.2
