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Some Simple Analytics of the Trade and Welfare Effects of Economic Partnership Agreements

Some Simple Analytics of the Trade and Welfare Effects of Economic Partnership Agreements The Cotonou Agreement, successor to the Lomé Convention, offers African, Caribbean and Pacific (ACP) countries preferential access to EU markets by establishing economic partnership agreements (EPAs) between the EU and blocks of ACP countries that are members of regional trading arrangements. ACP countries entering such arrangements could retain preferential access to the EU market, but on a reciprocal basis. This paper presents a relatively simple method (with moderate data requirements) to measure the likely short-run welfare consequences, static effects on trade flows and tariff revenue, of such an arrangement for ACP countries. The partial equilibrium method is illustrated for the case of the East African Cooperation (Kenya, Tanzania and Uganda). The analysis suggests that the welfare effects (excluding revenue effects) from a reciprocal agreement with the EU will be small, whether positive or negative, but ACP countries will experience short-run adjustment costs, especially in the form of revenue losses. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of African Economies Oxford University Press

Some Simple Analytics of the Trade and Welfare Effects of Economic Partnership Agreements

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References (4)

Publisher
Oxford University Press
Copyright
© The author 2005. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. all rights reserved. For permissions, please email: journals.permissions@oupjournals.org
ISSN
0963-8024
eISSN
1464-3723
DOI
10.1093/jae/eji006
Publisher site
See Article on Publisher Site

Abstract

The Cotonou Agreement, successor to the Lomé Convention, offers African, Caribbean and Pacific (ACP) countries preferential access to EU markets by establishing economic partnership agreements (EPAs) between the EU and blocks of ACP countries that are members of regional trading arrangements. ACP countries entering such arrangements could retain preferential access to the EU market, but on a reciprocal basis. This paper presents a relatively simple method (with moderate data requirements) to measure the likely short-run welfare consequences, static effects on trade flows and tariff revenue, of such an arrangement for ACP countries. The partial equilibrium method is illustrated for the case of the East African Cooperation (Kenya, Tanzania and Uganda). The analysis suggests that the welfare effects (excluding revenue effects) from a reciprocal agreement with the EU will be small, whether positive or negative, but ACP countries will experience short-run adjustment costs, especially in the form of revenue losses.

Journal

Journal of African Economies – Oxford University Press

Published: Sep 1, 2005

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