Time and Free Trade Agreements: Implications for the AfCFTA

Abstract

ABSTRACT This study examines how free trade agreements (FTAs) can boost economic growth by increasing trade, with clear implications for the African Continental Free Trade Agreement (AfCFTA). Our main finding is that in general, the effects of FTAs are delayed by at least 3 years on average for intra‐African trade. The results make the case for timely implementation of the agreement's tariff policies, as well as the investment plans to reduce barriers to trade and logistics. We analyse the timing and magnitude of FTA effects, organizing trade flows by their level of connection to Africa. We find that, for intra‐African trade, the positive impacts of FTAs are delayed for 3 years on average. A standard FTA increases trade flows by about 6%, with larger long‐run gains observed for African trade. These results highlight the importance of accelerating the implementation of AfCFTA commitments, including tariff reductions and complementary investments aimed at lowering trade and logistics barriers to avoid delaying the agreement's expected benefits.