Top PDF The impact of North-South and South-South trade agreements on bilateral trade.

The impact of North-South and South-South trade agreements on bilateral trade.

The impact of North-South and South-South trade agreements on bilateral trade.

Multilateralresistanceby definitionreferstotradecoststhatarenotconfinedtothebilateralbarriers between two countries. It is thus concerned with “third country” effects. If Chile and Peru sign an agreement but nothing happens with Uruguay, the cost of trading with Uruguay goes up in relative terms, so trade with Uruguay falls. By predicting reduced trade with third parties, accounting for multilateral resistance has many points of contact with the concept of trade diversion. In fact, the algebraoffersaprecisepredictionofwhatwouldhappentobilateraltradeinvolvingallcountrypairs.By differentiating equation 4 with respect to the MR terms but keeping the FTA term constant, it can be establishedthattradewiththirdpartiesfalls. 8 Tocomputethefullextentoftradediversionandhencea net effect on a country’s exports, however, would require a calculation for all third countries (e.g. changes in M i2  for all i importers) and would make us stray from this paper’s objective. Leaving this questiontofutureresearch,ourconcernremainswithbilateraltrade;MRisonlyrelevantforourefforts tocalculatethebilateralcomparativestaticeffectscorrectly.
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The energy-bias of North-South technology spillovers - a global, bilateral, bisectoral trade analysis

The energy-bias of North-South technology spillovers - a global, bilateral, bisectoral trade analysis

3 Analysis We set up an innovative econometric model that includes bilateral trade between distinct sectors and countries and corresponding energy and labor intensities. We eliminate the scale effect (increased output augments emissions) by computing all variables in intensity form. We define the model at the sector level so that the composition effect (sectoral changes can augment or attenuate emissions per unit produced) is taken into account and we are left with measuring the technique effect (better technologies and a higher environmental aware- ness with rising per capita income attenuate emissions per unit produced). We take into account disembodied and embodied spillovers. Herein, we compare the impact of imports used as an investment good to the impact of imports used as an intermediate input. In the former case, we hypothesize that advanced machinery and equipment imported from abroad enter the productive capital stock via investment and raise productivity. In the latter case, we hypothesize that the embodied technological knowledge not only improves the quality of the produced goods but also the productivity of the underlying production processes. Moreover, we hypothesize that productivity gains from trade through firm selection exist (as demon- strated theoretically by Melitz, 2003, in a model of heterogeneous firms 2 ). Overall, the high
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Do South-South Trade Agreements Increase Trade? Commodity-Level Evidence from COMESA

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, as existing North- North and North-South micro-level studies are likely to yield misleading predictions for South-South trade agreements. This paper focuses on the static effects of South-South preferential trade agreements stemming from changes in trade patterns. Specifically, it estimates the impact of the Common Market for Eastern and Southern Africa (COMESA) on Uganda’s imports between 1994 and 2003. Detailed import and tariff data at the 6-digit harmonized system level are used for more than 1,000 commodities. Based on a difference-in-difference estimation strategy, the paper finds that—in contrast to evidence from aggregate statistics—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, the paper finds no evidence of trade- diversion effects.
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Trade impacts of South Asian Free Trade Agreements: The case of Sri Lanka

Trade impacts of South Asian Free Trade Agreements: The case of Sri Lanka

Based on the econometrical methodologies of Baier and Bergstrand (2007), Urata and Okabe (2014) examined the impacts of RTAs including FTAs on trade flows, focusing on their trade creation and diversion effects. They estimated the gravity trade equation covering 67 countries/regions for 27 years from 1980 to 2006 at a disaggregated level of 20 products. Their estimation addressed the problem of the RTA-endogeneity bias and zero trade flows by applying the panel-data analysis with bilateral fixed effects and the Poison pseudo-maximum likelihood model as its estimating technique. Their main findings were that: plurilateral RTAs produce trade creation for many more products compared to bilateral RTAs; RTAs among developed countries generate trade creation for a half of all products but not trade diversion for most of the products, whereas RTAs among developing countries give rise to trade diversion for many more products – probably due to high tariffs imposed on imports from non-members by developing
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South-South Trade: A Quantitative Assessment

South-South Trade: A Quantitative Assessment

A rationale for trade integration of South-South goods and services can be made under both inward and outward-oriented development paradigms (e.g. Otsubo, 1998). Under the former, South-South trade is viewed as an alternative to North-South trade that would enable the South to reduce its dependence on the technologically dominant markets of the North and, through protection of “infant industries”, break into higher value product markets. A political manifestation of this concept can be traced back to the mid-1970s and the beginnings of the Global System of Trade Preferences among Developing Countries (GSTP). Under the outward-oriented development paradigm, South-South trade integration is seen as complementary to North-South trade as Southern markets, with their high growth potential, may offer attractive export opportunities. This type of South-South integration can be achieved through non-discriminatory integration in the multilateral GATT/WTO system or through non-discriminatory regional trade agreements. Indeed, rules-based South-South integration is undoubtedly one important reason for increasing the participation of low- and middle-income countries in the GATT/WTO.
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South-South Trade: Geography Matters

South-South Trade: Geography Matters

signi…cant sign of the coe¢cient of this variable indicates that paving an extra portion of a road between two trading partners increases their bilateral trade ‡ows. For the inter-state roads not totally paved, we can use the elasticity of this variable to compute the extra import ‡ows created when the percentage of pavement is completed to 100%. 30 In addition, we use the elasticity of the variable percentage of paved bilateral road obtained with speci…cation 6 which is econometrically more accurate because correcting for the endogeneity problem of this variable and also using the so called “…rst-order method” to replace the missing dependent observations. Not surprisingly, the results presented in Table 12 in Annexes indicate that the lower the percentage of paved bilateral road, the higher the impact of this infrastructure improvement on the import ‡ows. The trading partners most concerned are Mali and Senegal. Indeed, for the year 1998, the simulations indicate that improving the inter-state road between these partners from 31% to 100% paving can increase trade between them more than three times. This seems to be a big issue for the Union, because Senegal is the second most dynamic economy after Cote d’Ivoire, and its remoteness from the other members tends to weaken the Union economy. Moreover, this remoteness also a¤ects trade ‡ows between Senegal and Cote d’Ivoire. Indeed, the simulations suggest that a 100% pavement of the road between these two countries could double trade ‡ows between them. If we take into account all the extra trade created by this “100% paving of inter-state roads” infrastructure policy, trade ‡ows in this region are 2.87 times higher, a …gure that does make sense if we recall that the intra-regional trade ‡ows for this Union was only of 3% during the 90s.
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Impact of SAFTA on South Asian Trade

Impact of SAFTA on South Asian Trade

In the gravity equation, the key trade creation variable is a dummy equal to one if two trading countries are members of a common RTA (Regional Trade Agreement) and zero otherwise. A positive coefficient for the dummy indicates creation of additional trade caused by forging of the RTA after carefully controlling for other factors that possibly affect bilateral trade. A negative sign for the dummy is the indication that the RTA decreases trade. With regard to capturing the extra-regional trade behavior, we interact each period dummy to the RTA dummy of other five regional trading blocs. Since South Asian RTA was created in 1995, our period dummy equals one if the observations are for 1995 through 2010 and equals zero for years before 1995. The coefficients of these interaction dummies are thus expected to reveal extra-regional impact of SAPTA/SAFTA. Including other standard gravity controls we obtain our estimating model as follows:
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South South Trade: A Quantitative Assessment

South South Trade: A Quantitative Assessment

A rationale for trade integration of South-South goods and services can be made under both inward and outward-oriented development paradigms (e.g. Otsubo, 1998). Under the former, South-South trade is viewed as an alternative to North-South trade that would enable the South to reduce its dependence on the technologically dominant markets of the North and, through protection of “infant industries”, break into higher value product markets. A political manifestation of this concept can be traced back to the mid-1970s and the beginnings of the Global System of Trade Preferences among Developing Countries (GSTP). Under the outward-oriented development paradigm, South-South trade integration is seen as complementary to North-South trade as Southern markets, with their high growth potential, may offer attractive export opportunities. This type of South-South integration can be achieved through non-discriminatory integration in the multilateral GATT/WTO system or through non-discriminatory regional trade agreements. Indeed, rules-based South-South integration is undoubtedly one important reason for increasing the participation of low- and middle-income countries in the GATT/WTO.
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North-south trade and directed technical change

North-south trade and directed technical change

It may thus suggest that the process of trade liberalizations in India and China could be more bene…cial if accompanied by a tightening of IPRs. Before concluding, it is worth to mention brie‡y some interesting empirical observa- tions. The model predicts that in a period of growing world trade the R&D e¤ort of advanced countries should become more specialized towards the sectors in which those countries have a comparative advantage. It is then instructive to look at the evolution of the number of patents by technological category issued in the US over the last four decades. As reported by Hall et al. (2001), the three traditional …elds (Chemical, Me- chanical and Others) have experienced a steady decline, dropping from a share of 76% of total patents in 1965 to 51% only in 1990. Conversely, Computers and Communications rose from 5% to over 20%, Drugs and Medical from 2% to 10%, whereas Electrical and Electronics is the only stable …eld (16-18% of total). Albeit consistent with the theory, this evidence may also re‡ect technology cycles or changes in demand. On this respect, note that the model generates something resembling a product cycle, whereby sectors be- come less technology intensive after they move to the South. Distinguishing empirically between this prediction and the traditional view, according to which goods become less technology intensive before moving to LDCs, seem an interesting challenge for future work. Next, the model suggests that trade opening may trigger a transition in which innovation is mostly directed towards Northern sectors (to satisfy equation 21) and, at the same time, economic activity is relocated from the North to the South (z falls as ! rise). On this respect, evidence of skill-biased technical change and outsourcing seems broadly consis- tent with these predictions. Finally, the model suggests that market integration may have increased the income gap between poor and rich nations. While the impact of trade on di¤erent countries is a controversial issue, there are empirical works showing that trade may have contributed to a widening in the world income distribution. 23
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Analysis Bilateral Trade among South Asian Free Trade Agreements. (SAFTA) on Economy of Pakistan by Using CGE Model

Analysis Bilateral Trade among South Asian Free Trade Agreements. (SAFTA) on Economy of Pakistan by Using CGE Model

assumed to be equal across uses. In GTAP, the government revenues come from household income taxes, producers‘ taxes, and taxes on international transactions (minus subsidies, if they exist). As can be seen from Fig.1 Domestic Produced goods) the government spends its income on domestically produced goods-VDGA (value of domestic government purchases, evaluated at agents‘ prices) and imported goods - VIGA (value of expenditure on imported tradable commodities by the government). The total government expenditure on each commodity category i.e. domestically produced and imported supplies, is allocated across commodities by a Cobb-Douglas constant budget share. In GTAP, savings is derived by assuming a Cobb-Douglas utility function and is treated as a function of regional total income and price, so that all savers in the model face a common price for the savings commodity (PSAVE). In particular, savings enter a regional utility function, along with composite private consumption and aggregate government purchases. This reflects an implicit assumption of fixed savings rates. Savings are included as GLOBAL Savings in Fig.1. Thus, the regional income in excess of regional expenditure is saved and used as investments by producers. In the GTAP model, economic welfare is measured in terms of EV (equivalent variation), which indicates the reduction/increase in the external transfer, which would be equivalent in its effects to the tariff increase/decrease. Thus EV takes the old equilibrium incomes and prices, and computes the change needed to achieve new equilibrium utilities. There are two global sectors in the GTAP model for international consistency of trade and financial flows.
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Impact of Trade Facilitation Measures and Regional Trade Agreements on Food and Agricultural Tarde in South Asia

Impact of Trade Facilitation Measures and Regional Trade Agreements on Food and Agricultural Tarde in South Asia

South Asia has been considered as the least integrated region in the world despite its attempts to liberalize trade using various unilateral, bilateral, regional and multilateral arrangements. It has long been argued that the limited success of South Asia to liberalize regional trade was due to limited tariff reductions and remaining barriers present in trade agreements; less complementarities in production and consumption; and political friction among the countries. More recent studies indicate that smaller trade gains in South Asia is mainly due to the fact that inadequate attention was paid to trade facilitation measures such as efficiency of customs and other border procedures, quality of transport, and cost of international and domestic transport. In this context, the objective of this study is to provide quantitative estimates on gains that can be acquired from improving trade facilitation in South Asia, focusing on exports of food and agricultural commodities.
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North-South Trade and Directed Technical Change

North-South Trade and Directed Technical Change

The results of this paper are also consistent with a number of observations. The empir- ical …ndings in Section 3.1 and 3.2 provide some support to the channel emphasized in this paper. Moreover, the result that IPRs protection might be more e¤ective in open coun- tries may help explain the positive correlation between measures of IPRs protection and trade openness documented in Table 1 and in part of the empirical literature. The model also suggests that trade opening may trigger a transition in which innovation is mostly directed towards Northern sectors and, at the same time, economic activity is relocated from the North to the South. Evidence of skill-biased technical change and outsourcing seems broadly consistent with these predictions. Finally, the model suggests that market integration may have increased the income gap between poor and rich nations. While the impact of trade on di¤erent countries is a controversial issue, there are empirical works showing that trade may have contributed to a widening of the cross-country income dis- tribution. 37 In conclusion, while existing models have illustrated some important aspects of the complex relationship between trade, IPRs and innovation, the complementary ap- proach taken in this paper seems at least equally plausible and appears to be useful in explain a number of empirical observations.
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North-South Trade, Knowledge Spillovers and Growth

North-South Trade, Knowledge Spillovers and Growth

The CH methods have been controversial. Keller (1998) compared their results with those obtained from assigning bilateral trade partners randomly and found that regressions based on such simulated data generated on average larger estimated foreign knowledge spillovers, as well as a better fit in terms of R 2 . He concluded that the CH results may say little about the extent of foreign knowledge spillovers. Coe and Hoffmaister (1999) note that Keller’s bilateral import shares are similar to equal weights, or simple averages of trading partners knowledge stocks, suggesting that Keller’s weights are not in fact random. They derive three alternative sets of random weights that do not exhibit this property. When these are used to define the foreign knowledge stock, the estimated foreign knowledge spillover estimates are extremely small and the equations explain less of the variation in productivity than when the true bilateral import shares are used. From these results they conclude that using bilateral import weights or even simple averages to create a measure of foreign knowledge performs better than using random weights, suggesting that a country’s productivity is related to its trading partners’ knowledge stock. It is noted, however, that the importance of the actual intensity of the trading relationship is an unresolved issue, because of the public good nature of knowledge. Openness to trade appears to be important for the knowledge spillover, but the volume of trade may or may not be.
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North-South trade and directed technical change

North-South trade and directed technical change

and signi…cant impact on R&D investment. The …nal step is to show that this e¤ect is quantitatively large. This is done in Table 5, reporting a number of interesting industry statistics for the years 1972-1996, together with the predicted impact of imports from the South on the level of R&D expenditure over the period. For each of the …fteen 2-digit industries, the table reports in the …rst columns the relevant SIC 87 codes, the R&D share, skilled workers over total employment and import penetration (in percentage points) both overall and from low-wage countries in 1972. The next two columns show the percentage points increase of the two import measures. Note that while imports from the South were close to zero in almost all industries at the beginning of the sample, by the end of the period they have grown large in some sectors (up to more than 8% and 13% in Textiles and Other Manufacturing, respectively). The last column reports the percentage variation in R&D expenditure predicted by the increase in import penetration from the South over the 25 year sample, using the estimates of column 1 in Table 4 and assuming that all other variables (included import penetration from the other industrialized countries) remained constant. The predicted impact of North-South trade on the industry pattern of R&D is quite dramatic. All else equal, Textile and Other Manufacturing Industries (including Leather and Toys), where imitation is easy and the comparative advantage of the South is strong, would have su¤ered an 85 and 95 per cent drop in R&D investment, respectively. On the contrary, R&D in sectors where the comparative advantage of the North is strong, like Chemicals and Transportation Equipment (including Motor Veichles and Aircrafts) would barely be a¤ected.
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INTERNATIONAL TRADE NEGOTIATIONS, REGIONAL INTEGRATION AND SOUTH-SOUTH TRADE, ESPECIALLY IN COMMODTITIES

INTERNATIONAL TRADE NEGOTIATIONS, REGIONAL INTEGRATION AND SOUTH-SOUTH TRADE, ESPECIALLY IN COMMODTITIES

In Africa, some 14 regional trade agreements are in force, including the Arab Maghreb Union (UMA) in North Africa and in sub-Saharan Africa, the following: Central African Economic and Monetary Community (CEMAC), Common Market for Eastern and Southern Africa (COMESA), Eats African Community (EAC), Indian Ocean Commission (IOC), Economic Community of Central African States (ECCAS), Economic Community of West African States (ECOWAS), West African Economic and Monetary Union (UEMOA), Southern African Customs Union (SACU) and Southern African Development Community (SADC). These sub- regional groupings are expected to constitute a continental scale African Common Market under the auspices of the African Union by 2028. In the Asia-Pacific region, some 10 groupings are in force, including Association of South-East Asian Nations (ASEAN), South Asian Association for Regional Cooperation (SAARC), Economic Cooperation Organization (ECO) in continental Asia and Melanesian Spearhead Group (MSG), Pacific Island Countries Trade Agreement (PICTA/PACER) in the Pacific, and the Bangkok Agreement. In the Americas, Southern Common Market (MERCOSUR), the Andean Community, Caribbean Community (CARICOM) and Central American Common Market (CACM) operate alongside several plurilateral economic cooperation agreements. In the Middle East, the Gulf Cooperation Council (GCC) plans to establish an economic union by 2010. Negotiations for the Greater Arab Free Trade Area (GAFTA) were launched with a target date of 2008. Four Mediterranean-Basin countries (Egypt, Jordan, Morocco and Tunisia) have signed the Agadir Agreement as a stepping stone towards a Euro-Mediterranean FTA to be established by 2010.
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The rationale for South South trade; An Alternative Approach

The rationale for South South trade; An Alternative Approach

For many years, following the initial ideas of Prebisch, arguments in favour of S-S trade centred mainly on the issues of small size of the domestic market, economies of scale, problems of access to developed country markets (see, for example, UNCTAD, 1986:10–11 and Agatiello, 2007) or a slowdown in growth rates of developed-country economies thus growing potential for S-S trade expansion (South Centre 1996: ix-xiii). Some elements of these arguments are no longer valid. For example, access to markets of the North has improved considerably. Moreover, the experience of 1960s and 1970s has shown that S-S trade will not necessarily expand, even when regional preferential or free trade agreements are signed among a number of developing countries (de Melo and Panagariya, 1993:14–15 and chapters 8 and 9).
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Public and Expert Opinions on Free Trade Agreements in South America

Public and Expert Opinions on Free Trade Agreements in South America

In order to analyse the impact of free trade agreements (FTA), meta-analysis of the results of the research into this subject was performed using the sample of eight Spanish Language papers. A detailed description of each research is depicted in Table 5. In our research we included models in which natural logarithm of some measure of trade was regressed on the FTA dummy variable along with other explanatory variables. Regressand is expressed in terms of natural logarithms, and concerns imports, exports intra-industry trade or trade as a whole. Due to that construction of the models if the estimated coefficient is , countries with FTA memberships experience on average ( − 1) ∗ 100 percent more trade than countries outside the free trade area (Halvorsen & Palmquist, 1980). Still two points need to be made about this interpretation. A positive value of the coefficient does not unequivocally testify to trade creation of FTAs, as the additional trade can be a consequence of trade di- version. Secondly, this measure suffers from endogeneity issue, because a priori one can expect that countries that trade with one another a lot are more likely to establish a free trade association. The estimation strategy follows (Viechtbauer, 2010).
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Impact of south-south FDI and trade on the export upgrading of African economies

Impact of south-south FDI and trade on the export upgrading of African economies

Estimates of the effects of our variables of interest (and their intervals of confidence) on export diversification across different deciles of the distribution are plotted in Figure 2 together with the estimated coefficient from the OLS equivalent. Despite the different methodology adopted, which does not account for the complex panel structure of our data, coefficients are more or less in line with those reported in Table 2. However, the impact of imports presents a higher variability along the distribution of the diversification index and follows an inverse U-shaped pattern. Interestingly, imports from other developing countries have an above-average impact on the lower bound of the distribution and tend to decrease thereafter, whereas imports from OECD countries exert a stronger impact for a larger part of the distribution, with the exception of the extreme tails. FDI, on the other hand, tend to impact differently on export diversification; they seem to affect diversification strongly at more advanced stages, especially when coming from the North. This result which suggests that this type of flow seems to require stronger absorptive capactities by recipient economies and therefore benefit more those countries which already exhibit a sufficient degree of export diversification.
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Do south south trade agreements enhance member countries' trade? evaluating implications for development potential in the context of SAARC

Do south south trade agreements enhance member countries' trade? evaluating implications for development potential in the context of SAARC

Das (2007) has shown that North-South as well as South-South trade under different scenarios could enhance technological spillover and other factors facilitating trade. 7 Technological infrastructure enhances trade facilitation and efficiency of transshipments of goods across the border. Diffusion of technology helps countries to ‘catch-up’ with their advanced counterparts. Geographical distance, volumes of trade, market access, logistics infrastructure and per capita income work in tandem for facilitating trade flows. For reduction of inefficiencies related to transport costs, technological progress is necessary. The empirical model and estimated impacts, as described in Sections 4 and 5, offer a comparative perspective of export potentials of these regions and their performances from the frontiers. Revealed effectiveness of these trade flows depend on realization of growth and development potentials under SAARC’s SDG initiatives. For all these countries having similar resource endowments, following Heckscher-Ohlin presumption, the scope of gains from specialization and exchange is limited. The production modes are typically labor-intensive in semi-skilled, unskilled or low-tech goods. Country-specific non-economic factors stand in the way of narrowing the relative divergence across these nations. Since ‘natural’ barriers due to geography or topography do not pose major impediments for these countries, it is essential to consider the role of unnatural barriers like transparency, corruption, underinvestment, openness. Apart from developing these factors, increased intra-regional cooperation via trade and investment will help overcoming the gaps in per capita GDP. In other words, increase in trade and FDI flows, ceteris paribus, will enable reducing the inequality in productivity levels among the SAARC countries at different stages of economic growth. Physical capital formation as well as human capital acquisition both helps attainment of such
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Bilateral Free Trade Agreements and Customs Unions: The Impact of the EU Republic of South Africa Free Trade Agreement on Botswana

Bilateral Free Trade Agreements and Customs Unions: The Impact of the EU Republic of South Africa Free Trade Agreement on Botswana

The trade relationships between southern and eastern African states are difficult to disentangle. A plethora of trade and economic cooperation agreements exist both between the states of the region and between states within the region and outside. The major multi lateral agreements are the SACU, the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA), and the Cross-Border Initiative (CBI). How each is impacting upon the performance of any individual state is difficult to clearly articulate since the memberships of each agreement are not exclusive (see Lewis, 2001). Currently the most comprehensive organisation, in terms of membership, is COMESA but it appears to be somewhat fragile. In the longer term it may be that SADC emerges as the primary organisation among southern African states; one vision of the SADC agreement is a common market with free movements of commodities, capital, labour and services. However progress towards those objectives seems to be slow with the majority of agreements being partial, e.g., trade concessions to Malawi, Mozambique, Tanzania and Zambia by the SACU under the SADC Trade Protocol.
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