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Trade, Revenue And Welfare Effects Of The East African Community Customs Union Principle Of Asymmetry On Uganda: An Application Of Wits-Smart Simulation Model

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  • Othieno, Lawrence
  • Shinyekwa, Isaac

Abstract

Using the WITS-SMART simulation model, this paper provides insights on the effects of the East African Community Customs Union principle of asymmetry on Uganda with regard to trade, welfare and revenue effects since 2005. The end to the phased tariff reduction on category B products (these products were treated as sensitive products in 2005) increased trade creation and welfare effects. This effect shall have a reflection on consumer surplus in terms of reduced prices. The results also suggest that government shall incur a tariff revenue loss which should not be ignored given the fluctuating growth in the general trade tax revenue; hence the need to strengthen domestic ability to mobilise revenue or seek alternative source of funding. The results also suggest that to realise more trade created and welfare, effective elimination of non-tariff barriers to trade that would affect the expected benefits accruing from the trade reforms within the region is necessary. The diversion effect resulting from the CET on respective products like woven fabrics of cotton, soap products and paints and vanishes by inefficient producers within the union could equally be displaced through building specialised capacity in the sectors.

Suggested Citation

  • Othieno, Lawrence & Shinyekwa, Isaac, 2011. "Trade, Revenue And Welfare Effects Of The East African Community Customs Union Principle Of Asymmetry On Uganda: An Application Of Wits-Smart Simulation Model," Research Series 150480, Economic Policy Research Centre (EPRC).
    • Handle: RePEc:ags:eprcrs:150480
    DOI: 10.22004/ag.econ.150480
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    References listed on IDEAS

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    1. Baldwin, R E & Murray, Tracy, 1977. "MFN Tariff Reductions and Developing Country Trade Benefits under the GSP," Economic Journal, Royal Economic Society, vol. 87(345), pages 30-46, March.
    2. Padamja Khandelwal, 2004. "Comesa and Sadc: Prospects and Challenges for Regional Trade Integration," IMF Working Papers 2004/227, International Monetary Fund.
    3. Khorana, Sangeeta & Kimbugwe, Kato, 2009. "Assessing the Welfare Effects of the East African Community Customs Union’s Transition Arrangements on Uganda," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 24, pages 685-708.
    4. Sadni Jallab, Mustapha & Karingi, Stephen & Oulmane, Nassim & Perez, Romain & Lang, Rémi & Ben Hammouda, Hakim, 2005. "Economic and Welfare Impacts of the EU-Africa Economic Partnership Agreements," MPRA Paper 12875, University Library of Munich, Germany.
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    Cited by:

    1. Kore Marc Guei, 2019. "Does financial structure matter for economic growth: evidence from South Africa," Economics Bulletin, AccessEcon, vol. 39(3), pages 1941-1957.
    2. Ndubuisi O. Chukwu & Ambrose Nnaemeka Omeje & Kasie Emmanuel Ofoezie & Michael Okike Ugwu & Augustine Jideofor Mba, 2024. "Impact of Free Trade Area on Trade, Revenue and Welfare in Nigeria," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 16(1), pages 81-97, January.
    3. Subhash Jagdambe & Shaikh Mohd Mouzam, 2019. "Evaluating the Trade, Revenue and Welfare Implication of Plantation Crops under ASEAN–India FTA," Journal of Asian Economic Integration, , vol. 1(2), pages 224-241, September.
    4. Shinyekwa, Isaac & Lawrence, Othieno, 2013. "Comparing the Performance of Uganda’s Intra-East African Community Trade and Other Trading Blocs: A Gravity Model Analysis," Research Series 159667, Economic Policy Research Centre (EPRC).

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