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Abstract
This study evaluates the welfare implications of tariff reforms in the cereals sector of the SADC region.
Applying the global simulation model (GSIM), a multi-country partial equilibrium model, to the cereals
industries of thirteen SADC countries, the study computes price and welfare effects of tariff reforms on
different economic groups in each country, and evaluates responsiveness to external supply shocks. Results
indicate that on net, elimination of intra-regional tariffs is welfare reducing for the region - a robust result as
indicated by the sensitivity tests. South Africa emerges as the sole beneficiary of intra-regional tariff
elimination, with positive net welfare gains attained through higher producer surplus; whereas the rest of SACU
experiences losses in consumer surplus, and the rest of SADC experiences losses in producer surplus. Imports
from the rest of the world drop for most net-importer SADC countries, whereas trade with the SADC region
generally increases, indicating that both trade diversion and trade creation result from these tariff reforms. The
negative net welfare effects suggest that the trade diversion effects exceed the trade creation effects for most of
SADC. Larger, positive welfare effects are expected for all of SADC, except South Africa and Zimbabwe, when
countries implement indiscriminate reform of MFN tariff rates, although gains come at major costs to regional
producers. Imports from both the region and the world are also expected to increase. Tariff reforms also seem to
serve the purpose of spreading price and quantity risk, albeit meagerly, from supply shocks generated within the
region, making it less intense in countries of origin, and more intense for the rest of SADC.