Impact of FTA within Eastern and Southern Africa Countries and Unilateral Tariff Elimination by other Regions

This paper compares the impact of FTA within Eastern and Southern Africa countries and unilateral tariff elimination by other regions. The analysis is carried out using GTAP version-6 database by mapping the 57 sectors into 19 new sectors and the 87 regions into 17 new regions. The simulation results show that equivalent variation change for each country differs from one another owing to preferential trade. Terms of trade gains contribute for the total equivalent variation change or welfare for the eight countries. And agri-cultural commodities such as sugar, a sensitive and highly taxed commodity by European Union and United states, cereals and textile contribute for terms of trade gains. The welfare gain for Mozambique is better in the case of bilateral tariff reduction in the Africa-eight scenario than gains from unilateral tariff elimination by other countries or regions. South Africa registers a significant loss (US$ 3.9 million) in the Africa-eight scenario being a major trading partner for southern Africa countries. And the unilateral tariff elimination by the developed doesn¡Çt pose any impact on their real GDP, household utility, and terms of trade.