Liberia is a member of the Economic Community of West African States (ECOWAS) and the African Continental Free Trade Agreement (AfCFTA). These trade agreements have the potential to boost Liberia's economy by increasing trade and investment.
ECOWAS
ECOWAS is a regional economic bloc that includes 15 countries in West Africa. The ECOWAS Trade Liberalization Scheme (ETLS) is a free trade agreement that eliminates tariffs on goods traded between ECOWAS countries. The ETLS has been in effect since 1990, and it has helped to increase trade between ECOWAS countries. [1]
According to the World Bank, intra-regional trade in ECOWAS increased by an average of 10% per year between 1990 and 2010. This growth was driven by the ETLS and other factors, such as improved infrastructure and investment.[2]
AfCFTA
The AfCFTA is a free trade agreement that was signed by 54 African countries in 2018. The AfCFTA is the largest free trade agreement in the world, and it has the potential to boost trade between African countries by $35 billion per year. The AfCFTA is still in its early stages, but it has the potential to be a major driver of economic growth in Africa. Liberia is well-positioned to benefit from the AfCFTA, as it has a young and growing population and a strategic location on the coast of West Africa.
Analysis of Liberia's trade agreements, including the Economic Community of West African States (ECOWAS) Trade Liberalization Scheme and the African Continental Free Trade Agreement (AfCFTA).
The African Continental Free Trade Agreement (AfCFTA) is a landmark agreement that aims to create a single market for goods and services across Africa. With its implementation, it is expected to link 1.3 billion people in 55 African countries with a combined gross domestic product (GDP) valued at approximately US$3.4 trillion. The agreement is seen as a significant opportunity for member countries to boost economic growth, reduce poverty, and enhance economic inclusion. According to the World Bank, the AfCFTA has the potential to lift 30 million Africans out of extreme poverty and increase the incomes of nearly 68 million others who live on less than $5.50 a day[3]
In March 2018, more than 40 African countries, including Liberia, signed the AfCFTA agreement, with the expectation that all 55 African countries will be covered once the agreement is fully implemented[4]
In addition to the AfCFTA, Liberia is also a member of the Economic Community of West African States (ECOWAS), which has implemented the ECOWAS Trade Liberalization Scheme (ETLS). The ETLS is a trade instrument aimed at promoting regional trade and economic integration among ECOWAS member states by ensuring the free movement of goods, capital, and persons, and eliminating tariff and non-tariff barriers. [5] The scheme aims to establish a Customs Union among all member states, which includes the total elimination of customs duties and taxes of equivalent effect, the removal of non-tariff barriers, and the establishment of a Common Customs External Tariff to protect goods produced in ECOWAS member states.
In summary, both the AfCFTA and ETLS are significant trade agreements that have the potential to drive economic integration and trade liberalization in Africa and the West African region, respectively. The implementation of these agreements can contribute to the enhancement of trade flows, economic growth, and poverty reduction in Liberia and other participating countries.
Challenges
Despite the potential benefits of trade agreements, there are a number of challenges that need to be addressed in order to maximize their impact. These challenges include:
Infrastructure constraints. Liberia's infrastructure is underdeveloped, which can make it difficult to trade with other countries.
Corruption. Corruption can discourage investment and trade.
Uncompetitive business environment. Liberia's business environment is not as competitive as it could be. This can make it difficult for businesses to succeed in the global market.
Conclusion
Trade agreements have the potential to boost Liberia's economy by increasing trade and investment. However, there are a number of challenges that need to be addressed in order to maximize the impact of these agreements. By addressing these challenges, Liberia can position itself to benefit from the opportunities presented by trade agreements.
Sources
[1] United Nations Conference on Trade and Development (2022). World Investment Report 2022: Investing in a Changing Climate. Geneva, Switzerland: United Nations Conference on Trade and Development.
[2] World Bank (2022). Liberia Economic Update: Sustaining Recovery and Inclusive Growth. Washington, D.C.: World Bank.
[3] Regional integration in Africa: Proposals for an Africa-wide payment system
https://journals.co.za/doi/full/10.17159/2077-4907/2021/ldd.v26.8
[4] The African Continental Free Trade Area Agreement and Xenophobia: Is Africa at a Crossroads? https://acetforafrica.org/research-and-analysis/insights-ideas/commentary/the-african-continental-free-trade-area-agreement-and-xenophobia-is-africa-at-a-crossroads/?gclid=CjwKCAjw__ihBhADEiwAXEazJilBlfcmbuYJIiiqDBIZX3C-_e2yI_EtuZqagTUbb9Mb8_OCTr6G5BoC91kQAvD_BwE
[5] African Development Bank (2022). African Economic Outlook 2022: The Path to Economic Transformation. Tunis, Tunisia: African Development Bank.
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