@article{Keck:331422,
      recid = {331422},
      author = {Keck, Alexander and Piermartini, Roberta},
      title = {The Economic Impact of EPAs in SADC Countries},
      address = {2005},
      pages = {32},
      year = {2005},
      note = {Presented at the 8th Annual Conference on Global Economic  Analysis, Lübeck, Germany and WTO Staff Working Paper No.  ERSD-2005-04},
      abstract = {The Cotonou Agreement introduces new fundamental  principles with respect to trade between the European Union  (EU) and African, Carribean and Pacific (ACP) countries  relative to the Lomé Convention: in particular,  negotiations on the basis of different regional groupings  and reciprocity are now important pillars of EU-ACP  co-operation. Non-reciprocal preferential market access for  ACP economies will only last until 1 January 2008. After  that date, it will be replaced by a string of Economic  Partnership Agreements (EPAs) meant to progressively  liberalise trade in a reciprocal way. The progressive  removal of barriers to trade is expected to result in the  establishment of Free Trade Areas (FTAs) between the EU and  ACP regional groups in accordance with the relevant WTO  rules and help further existing regional integration  efforts among the ACP. An applied general equilibrium model  (15 regions, 9 sectors) is used to simulate the impact of  EPAs for countries of the Southern African Development  Community (SADC), some of which are part of the SADC  negotiating group, while others are part of the Eastern and  Southern African (ESA) group, which includes members of the  Common Market for Eastern and Southern Africa (COMESA). The  standard Global Trade Analysis Project (GTAP) model has  been extended to include the elimination of textile quotas,  EU enlargement to 25 members as well as tax revenue sharing  and a common external tariff among Southern African Customs  Union (SACU) countries. A number of comparisons between  different scenarios are undertaken, in particular: (i) the  EPA scenario is compared to the multilateral liberalization  scenario; (ii) SADC liberalization with the EU only is  compared to a scenario with simultaneous regional  integration among African economies and to the case of the  EU also signing an FTA with Mercosur; and (iii) a complete  reduction of import barriers is contrasted with partial  liberalization (i.e. only 50 per cent tariff reductions in  agriculture) and with full trade liberalization that  includes the elimination of subsidies. The issue of tariff  revenue loss is also addressed and the required tax  replacement is calculated. Selected experiments are re-run  under an unemployment closure. Simulation results show that  an EPA with the EU is welfare-enhancing for SADC, leading  also to substantive increases in real GDP. Estimated gains  for the region as a whole are of the order of 1.5 billion  dollars (constant 2001 $), but there is some evidence of  trade diversion from the rest of developing countries. For  most countries further gains may arise from intra-SADC  liberalization. The possibility of the EU entering an FTA  with other countries, such as Mercosur, reduce estimated  gains, but they still remain largely positive. Similarly,  estimated gains need to be revised downwards if agriculture  liberalization is not as far reaching as a reduction of  import barriers for manufactures. At the sectoral level,  the largest expansions in SADC economies take place in the  animal agriculture and processed food sectors, while  manufacturing becomes comparatively less attractive  following EU-SADC liberalization. Interestingly,  multilateral liberalization would instead foster some of  the manufacturing sectors (textile and clothing and light  manufacturing). Results also show the need for the SACU  tariff pooling formula to be adjusted to reflect new import  patterns as tariffs are removed.},
      url = {http://ageconsearch.umn.edu/record/331422},
}