Some simple analytics of the trade and welfare effects of economic partnership agreements

Chris Milner, Oliver Morrissey, Andrew McKay

Research output: Contribution to journalArticlepeer-review

29 Citations (Scopus)

Abstract

The Cotonou Agreement, successor to the Lome 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.
Original languageEnglish
Pages (from-to)327-58
Number of pages32
JournalJournal of African Economies
Volume14
Issue number3
DOIs
Publication statusPublished - Sep 2005

Keywords

  • Development Planning and Policy
  • Trade Policy
  • Factor Movement
  • International Linkages to Development
  • Economic Integration (F150)
  • International Trade Organizations (F130)
  • Foreign Exchange Policy (O240)
  • Role of International Organizations (O190)

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