An Analysis of a US–Southern African Customs Union (SACU) Free Trade Agreement

SummaryThis paper analyzes the potential economic effects of bilateral negotiations for an FTA between the United States and the Southern African Customs Union (SACU). The US–SACU FTA bilateral negotiations were initiated in June 2003, but have become deadlocked over a series of issues of concern to the SACU. To determine whether a bilateral FTA might be in the SACU members’ interests, we use the Michigan Model of World Production and Trade to assess the welfare and other economic effects of a bilateral FTA. We conclude that the benefits of an FTA are rather small, and that the interests of the global trading community, including the United States and SACU, could be better served by unilateral and especially multilateral liberalization.