IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/330214.html
   My bibliography  Save this paper

On the optimality of Common External Tariffs in Africa: Evidence from the EAC Customs Union

Author

Listed:
  • Bouët, Antoine
  • Laborde, David
  • Traore, Fousseini

Abstract

We study the determination of a common external tariff for African customs unions, using the case of the EAC. We use trade and tariff data at the HS6 level and a multi-sector multi-country computable general equilibrium model with the consistent tariff aggregator. We assume that the optimal common external tariff will keep three tariff bands and the same distribution of HS6 lines in these three bands as the current distribution. The availability of detailed data allows us to keep detailed information to feed the model, and thus to make more accurate estimates. Compared to the current tariff bands, the optimal common external tariff implies less tariff dispersion and a higher average tariff. This common external tariff maximizes the total welfare of the region. The common external tariff that maximizes the welfare of each member of the region is different: larger for Kenya, the largest country in the zone, and smaller for the other countries, including Rwanda, the smallest country in the zone. The adoption of this common external tariff is a Pareto-superior reform. However, if there is perfect mobility of factors between countries in the zone, divergence of interest about optimal trade policy is larger: if the optimal common external tariff which maximizes regional welfare is implemented, the GDP increases in the largest country, but it decreases in the smallest countries.

Suggested Citation

  • Bouët, Antoine & Laborde, David & Traore, Fousseini, 2021. "On the optimality of Common External Tariffs in Africa: Evidence from the EAC Customs Union," Conference papers 330214, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:330214
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/330214/files/10978_%20Bou%C3%ABt.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Markusen, James R & Svensson, Lars E O, 1985. "Trade in Goods and Factors with International Differences in Technology," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 175-192, February.
    2. Harry G. Johnson, 1953. "Optimum Tariffs and Retaliation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(2), pages 142-153.
    3. Jones, Ronald W. & Peter Neary, J., 1984. "The positive theory of international trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 1, pages 1-62, Elsevier.
    4. Bouët, Antoine & Cosnard, Lionel & Laborde, David, 2017. "Measuring Trade Integration in Africa," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 32(4), pages 937-977.
    5. Bouët, Antoine & Laborde Debucquet, David & Traoré, Fousseini, 2022. "MIRAGRODEP with endogenous tariffs 1.0: Documentation," AGRODEP technical notes TN-27, International Food Policy Research Institute (IFPRI).
    6. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 11-32.
    7. James E. Anderson & J. Peter Neary, 2003. "The Mercantilist Index of Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 627-649, May.
    8. repec:dau:papers:123456789/6497 is not listed on IDEAS
    9. Gatsios, Konstantine & Karp, Larry, 1995. "Delegation in a general equilibrium model of customs unions," European Economic Review, Elsevier, vol. 39(2), pages 319-333, February.
    10. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200, December.
    11. Bouët, Antoine & Odjo, Sunday P., 2019. "Overview [in Africa agriculture trade monitor 2019]," IFPRI book chapters, in: Africa agriculture trade monitor 2019, chapter 1, pages aatm9-16, International Food Policy Research Institute (IFPRI).
    12. Hamanaka, Shintaro, 2015. "The Selection of Trade Integration Indicators: Intraregional Share, Intensity, Homogeneous Intensity, and Introversion Index," ADB Economics Working Paper Series 455, Asian Development Bank.
    13. Bouët, Antoine & Laborde Debucquet, David & Robichaud, Veronique & Traore, Fousseini & Tokgoz, Simla, 2022. "MIRAGRODEP 2.0: Documentation," AGRODEP technical notes TN-26, International Food Policy Research Institute (IFPRI).
    14. Konstantine Gatsios & Larry Karp, 1991. "Delegation Games in Customs Unions," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 391-397.
    15. Bouët, Antoine & Odjo, Sunday P., 2019. "Africa agriculture trade monitor 2019," IFPRI books, International Food Policy Research Institute (IFPRI), number 9780896296909.
    16. Yvan Decreux & Hugo Valin, 2007. "MIRAGE, Updated Version of the Model for Trade Policy Analysis: Focus on Agriculture and Dynamics," Working Papers 2007-15, CEPII research center.
    17. Kemp, Murray C. & Wan, Henry Jr., 1976. "An elementary proposition concerning the formation of customs unions," Journal of International Economics, Elsevier, vol. 6(1), pages 95-97, February.
    18. Bouët, Antoine & Laborde Debucquet, David & Traoré, Fousseini, 2022. "MIRAGRODEP-AEZ 1.0: Documentation," AGRODEP technical notes TN-24, International Food Policy Research Institute (IFPRI).
    19. David Collie, 1997. "Delegation and Strategic Trade Policy," International Economic Journal, Taylor & Francis Journals, vol. 11(3), pages 35-46.
    20. Mohamed Hedi Bchir & Yvan Decreux & Jean-Louis Guérin & Sébastien Jean, 2002. "MIRAGE, a Computable General Equilibrium Model for Trade Policy Analysis," Working Papers 2002-17, CEPII research center.
    21. Angel Aguiar & Maksym Chepeliev & Erwin L. Corong & Robert McDougall & Dominique van der Mensbrugghe, 2019. "The GTAP Data Base: Version 10," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 4(1), pages 1-27, June.
    22. Antoine Bouët, 2000. "La délégation de la politique commerciale dans une union douanière," Revue Économique, Programme National Persée, vol. 51(3), pages 725-734.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ilaria Fusacchia & Jean Balié & Luca Salvatici, 2022. "The AfCFTA impact on agricultural and food trade: a value added perspective," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(1), pages 237-284.
    2. Hideo Konishi & Carsten Kowalczyk & Tomas Sjostrom, 2003. "Free Trade, Customs Unions, and Transfers," Boston College Working Papers in Economics 568, Boston College Department of Economics.
    3. Winters, L. Alan, 1996. "Regionalism versus Multilateralism," CEPR Discussion Papers 1525, C.E.P.R. Discussion Papers.
    4. Bouët, Antoine & Berisha-Krasniqi, Valdete & Estrades, Carmen & Laborde, David, 2012. "Trade and investment in Latin America and Asia: Perspectives from further integration," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 193-210.
    5. Karl Morasch, 2000. "Decentralization of Industrial Policy as Strategic Delegation," Discussion Paper Series 193, Universitaet Augsburg, Institute for Economics.
    6. Lisandro Abrego & Raymond Riezman & John Whalley, 2013. "How often are propositions on the effects of regional trade agreements theoretical curiosa?," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 9, pages 129-148, World Scientific Publishing Co. Pte. Ltd..
    7. Maria Cipollina & Luca Salvatici, 2008. "Measuring Protection: Mission Impossible?," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 577-616, July.
    8. Richard Baldwin, 2008. "Big-Think Regionalism: A Critical Survey," NBER Working Papers 14056, National Bureau of Economic Research, Inc.
    9. Ederington,Josh & Ruta,Michele, 2016. "Non-tariff measures and the world trading system," Policy Research Working Paper Series 7661, The World Bank.
    10. Bouet, Antoine & Laborde Debucquet, David, 2010. "Economics of export taxation in a context of food crisis," IFPRI discussion papers 994, International Food Policy Research Institute (IFPRI).
    11. Wisarut Suwanprasert, 2020. "The role of the most favored nation principle of the GATT/WTO in the New Trade model," Review of International Economics, Wiley Blackwell, vol. 28(3), pages 760-798, August.
    12. Ilaria Fusacchia & Alessandro Antimiani & Luca Salvatici, 2021. "An assessment of import tariff costs for Italian exporting firms," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(1), pages 31-56, April.
    13. Bouet, Antoine & Laborde, David, 2008. "The potential cost of a failed Doha Round," Issue briefs 56, International Food Policy Research Institute (IFPRI).
    14. Carmen Díaz-Roldán & María del Carmen Ramos-Herrera, 2021. "Innovations and ICT: Do They Favour Economic Growth and Environmental Quality?," Energies, MDPI, vol. 14(5), pages 1-17, March.
    15. John Christopher Beghin & Anne-Célia Disdier & Stéphan Marette, 2017. "Trade restrictiveness indices in the presence of externalities: An application to non-tariff measures," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 5, pages 81-104, World Scientific Publishing Co. Pte. Ltd..
    16. Bouët, Antoine & Laborde Debucquet, David & Traoré, Fousseini, 2017. "The European Union–West Africa Economic Partnership Agreement," IFPRI discussion papers 1612, International Food Policy Research Institute (IFPRI).
    17. Subhayu Bandyopadhyay & Sajal Lahiri & Howard J. Wall, 2009. "Cross-border lobbying in preferential trading agreements: implications for external tariffs," Working Papers 2009-041, Federal Reserve Bank of St. Louis.
    18. Chen, Bo & Ma, Hong & Xu, Yuan, 2014. "Measuring China’s trade liberalization: A generalized measure of trade restrictiveness index," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 994-1006.
    19. Raimondos-Moller, Pascalis & Woodland, Alan D., 2006. "Measuring tax efficiency: A tax optimality index," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1903-1922, November.
    20. Krishna, Pravin & Bhagwati, Jagdish, 1997. "Necessarily welfare-enhancing customs unions with industrialization constraints: The Cooper-Massell-Johnson-Bhagwati conjecture," Japan and the World Economy, Elsevier, vol. 9(4), pages 441-446, December.

    More about this item

    Keywords

    International Relations/Trade;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:330214. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.