A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization
AbstractAn applied general equilibrium model with oligopoly and scale economies, based on 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 non-EU suppliers, and (d) potentially adverse effects on the aggregate demand for labor. We contrast this FTA with a multilateral liberalization scenario along the lines of those proposed under the Doha Development Round and find this more beneficial to Morocco, with overall welfare gains due 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. We conclude that Morocco would be better off pursuing trade liberalization in the multilateral arena.
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Bibliographic InfoPaper provided by Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University in its series GTAP Working Papers with number 1643.
Date of creation: 2004
Date of revision:
Note: GTAP Working Paper No. 30
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Other versions of this item:
- Elbehri, Aziz & Hertel, Thomas, 2006. "A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 496-525.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F15 - International Economics - - Trade - - - Economic Integration
This paper has been announced in the following NEP Reports:
- NEP-AFR-2005-01-02 (Africa)
- NEP-ALL-2005-01-02 (All new papers)
- NEP-CMP-2005-01-02 (Computational Economics)
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