Macroeconomic and Welfare Implications of FTAs: The Harnessing Role of Trade Infrastructure—The Case of AfCFTA

International trade policy research is replete with empirical analysis relating to the enormous potential benefits that regional integration efforts hold for member countries that sign onto such agreements. While the realization of such benefits is ex-post, the signing of such agreements has always been based on ex-ante analysis. This chapter discusses the African Continental Free Trade Area (AfCFTA) and its enormous potential benefits for member countries (i.e., state parties), especially with regards to the welfare implications of lower prices for consumers and expanded markets for producers through tariff reductions, and the removal of non-tariff barriers (NTBs). NTBs in the form of burdensome “behind the border” policy/administrative procedures and various technical requirements cumulatively lead to administrative red tape, higher compliance costs, and ultimately higher trade costs (SSA has the highest within the global multilateral trading system). Thus, the chapter will analyze the potential trade impact of AfCFTA in reducing trade costs and creating jobs. In addition, the chapter will seek to obtain measures of the potential trade diversion and/or trade creation impact of the AfCFTA for member countries, the welfare implications for consumers and producers, and how trade facilitation in terms of trade infrastructure in SSA can pose as impediments to and/or opportunities for realizing the potential macroeconomic and welfare benefits of AfCFTA.