A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization
Abstracton detailed plant-level data, is used to contrast the impacts of the Morocco-EU free trade area (FTA) to multilateral trade liberalization on Morocco’s economy. Simulation results show that the FTA agreement is likely to have adverse effects on Morocco due to: (a) deteriorating terms of trade, (b) reductions in output per firm in industries dominated by scale economies, (c) diversion of imports away from relatively low cost, non-EU suppliers, and (d) potentially adverse effects on the aggregate demand for labor which could exacerbate already high levels of unemployment. We contrast this FTA with a multilateral liberalization scenario along the lines of those proposed under the Doha Development Round and find this to be more beneficial to Morocco, despite the associated income transfer from the EU to Morocco. The difference may be attributed to: (a) lesser terms of trade losses, (b) positive scale effects, (c) non-preferential liberalization of imports into Morocco, and (d) a positive impact on aggregate labor demand and hence unemployment. We conclude that Morocco would be better off pursuing trade liberalization in the multilateral arena.
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Bibliographic InfoArticle provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.
Volume (Year): 21 (2006)
Issue (Month): ()
Applied general equilibrium; Market Structure; Trade liberalization; Developing economies; Morocco;
Other versions of this item:
- Elbehri, Aziz & Hertel, Thomas, 2004. "A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization," GTAP Working Papers 1643, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F15 - International Economics - - Trade - - - Economic Integration
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