Price Transmission Effect of Establishing FTA with African Countries from the Perspective of Trade Facilitation

Abstract

The present article introduces the price transmission effect of establishing free trade areas with African countries from the perspective of trade facilitation. Studies on China-Africa economic cooperation, tariff reduction effects, trade facilitation effects, and price transmission effects in free trade areas were reviewed. The existing literature rarely incorporates tariffs, trade facilitation, and price transmission mechanisms into the research when studying the effects of free trade areas. The present article introduces trade facilitation into the research field of China-Africa cooperation. Taking the China-Mauritius free trade area as an example, the Global Trade Analysis Project model is used to study the price transmission effect after the establishment of the China-African free trade area. Create a model and motivation for other countries to establish free trade areas with African countries. The main conclusions are as follows: China-Mauritian free trade area has improved not only the terms of trade, GDP, and social welfare of the two countries, but also other African countries. This improvement effect mainly comes from the improvement of trade facilitation, and the contribution of zero tariff policy is relatively small. The domestic price changes in many industrial sectors of the two countries showed a significant increase, while the import prices generally showed a downward trend. Therefore, countries should actively participate in the process of global economic integration, and, in the negotiation of trade liberalization, both sides should adopt differentiated negotiation strategies and improve the weak aspects of trade facilitation, respectively, to achieve a win-win situation.