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A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization

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  • Elbehri, Aziz
  • Hertel, Thomas

Abstract

An 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 Info

Paper provided by Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University in its series GTAP Working Papers with number 1643.

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Date of creation: 2004
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Handle: RePEc:gta:workpp:1643

Note: GTAP Working Paper No. 30
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Cited by:
  1. KavallarI, A. & Schmitz, P. M., 2010. "Preference erosion effects on the agricultural sector of the EU’s Mediterranean Partner Countries," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 11(2), June.
  2. Hess, Sebastian, 2005. "An Econometric Model of CGE Simulations," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24713, European Association of Agricultural Economists.
  3. Lahsen Abdelkmalki & Mustapha Sadni Jallab & René Sandretto, 2007. "The Free Trade Agreement Between the United States and Morocco. The Importance of a Gradual and Assymetric Agreement," Post-Print halshs-00142503, HAL.
  4. Kavallari, Aikaterini & Borresch, Rene & Schmitz, P. Michael, 2006. "Modelling agricultural policy reforms in the Mediterranean basin - Adjustments of AGRISIM," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10074, European Association of Agricultural Economists.

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