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The welfare implications of trade liberalization between the Southern Mediterranean and the EU

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  • Patricia Augier
  • Michael Gasiorek

Abstract

The impact on the Southern Mediterranean Countries (SMC) of the current process of trade liberalization with the European Union is explored. The methodology is that of computable general equilibrium modelling under imperfect competition and the model includes ten countries and 11 sectors. This allows for both a cross-country and cross-sectoral analysis of the results. The experiments considered are the full liberalization of tariffs, as well as changes in market access and trade-induced changes in productivity. A key feature of the paper is that the phased introduction of tariff reductions is allowed for as explicitly envisaged in the Agreements. The results show that the process of liberalization may have a substantial, though non-monotonic, impact on the SMC economies in terms of both changes in production and through this on welfare. The welfare impact is potentially very high in particular for the high tariff economies. The sources of the welfare gain tend to derive from perfectly competitive explanations of trade for the high tariff economies, and from imperfectly competitive explanations of trade for the low tariff economies.

Suggested Citation

  • Patricia Augier & Michael Gasiorek, 2003. "The welfare implications of trade liberalization between the Southern Mediterranean and the EU," Applied Economics, Taylor & Francis Journals, vol. 35(10), pages 1171-1190.
  • Handle: RePEc:taf:applec:v:35:y:2003:i:10:p:1171-1190
    DOI: 10.1080/0003684032000081311
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    References listed on IDEAS

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    1. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2009. "Some Economic Effects of the Free Trade Agreement between Tunisia and the European Union," World Scientific Book Chapters,in: Globalization And International Trade Policies, chapter 11, pages 343-392 World Scientific Publishing Co. Pte. Ltd..
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    3. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Economic implications for Turkey of a Customs Union with the European Union," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 16, pages 395-404 World Scientific Publishing Co. Pte. Ltd..
    4. repec:fth:michin:385 is not listed on IDEAS
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    1. Nadia Belhaj Hassine & Veronique Robichaud & Bernard Decaluwé, 2010. "Agricultural Trade Liberalization, Productivity Gain and Poverty Alleviation: A General Equilibrium Analysis," Working Papers 519, Economic Research Forum, revised 05 Jan 2010.
    2. Cies´lik, Andrzej & Hagemejer, Jan, 2009. "Assessing the Impact of the EU-sponsored Trade Liberalization in the MENA Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 24, pages 343-368.
    3. Mouna Cherkaoui & Ayache Khellaf & Abdelaziz Nihou, 2011. "The Price Effect of Tariff Liberalization in Morocco: Measuring the Impact on Household Welfare," Working Papers 637, Economic Research Forum, revised 10 Jan 2011.
    4. World Bank, 2006. "Fostering Higher Growth and Employment in the Kingdom of Morocco," World Bank Publications, The World Bank, number 7114.
    5. Kavallari, Aikaterini & Schmitz, P. Michael, 2008. "Multilateral trade liberalisation and Preference erosion: Effects on the agricultural sector of the EU's Mediterranean Partner Countries," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44177, European Association of Agricultural Economists.
    6. Kavallari, Aikaterini & Schmitz, P. Michael, 2007. "An Empirical Assessment of Agricultural Trade Policies in the Mediterranean Basin - Regional Effects on the EU Member States," 103rd Seminar, April 23-25, 2007, Barcelona, Spain 9395, European Association of Agricultural Economists.
    7. Walkenhorst, Peter & Malouche, Mariem, 2006. "Trade Policy and Export Performance in Morocco," MPRA Paper 23119, University Library of Munich, Germany.
    8. GAUTHIER Fatima, EL HADAD & Etienne, MONTAIGNE & Michel, PETIT & Hilel, HAMADACHE & Soliman, Ibrahim & Mashhour, Ahmed & Gaber, Mohamed & Ait El Mekki, Akka & El Hindi, Atieh & Thabet, Haitham & Thabe, 2011. "A review of the national and international agro-food policies and institutions in the Mediterranean Region," MPRA Paper 66801, University Library of Munich, Germany.
    9. Nadia Belhaj Hassine & Veronique Robichaud & Bernard Decaluwé, 2010. "Does Agricultural Trade Liberalization Help The Poor in Tunisia? A Micro-Macro View in A Dynamic General Equilibrium Context," Working Papers 556, Economic Research Forum, revised 10 Jan 2010.
    10. Lucke, Bernd & Zotti, Jacopo, 2016. "Macroeconomic effects of the Barcelona Initiative," Journal of Policy Modeling, Elsevier, vol. 38(5), pages 837-854.
    11. Chun-Chu Liu, 2006. "A computable general equilibrium model of the southern region of Taiwan: the impact of the Tainan science-based industrial park," Applied Economics, Taylor & Francis Journals, vol. 38(14), pages 1655-1661.
    12. Kavallari, Aikaterini & 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.
    13. Kavallari, Aikaterini & Schmitz, P. Michael, 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.
    14. 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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