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Economic and Welfare Impacts of the EU-Africa Economic Partnership Agreements

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  • Karingi, Stephen
  • Lang, Rémi
  • Oulmane, Nassim
  • Perez, Romain
  • Sadni, Mustapha
  • Hammouda, Hakim Ben

Abstract

This study tries to quantify the concerns that have been raised often on adjustment costs likely to be faced by African countries and makes recommendations of how the EPAs could be made to work in Africa’s favour. The study addresses the following questions. First, how are African countries likely to gain or lose from a bilateral trade liberalisation between Africa and the EU as governed by the EPAs reciprocity principle? Second, what sectors in Africa are most likely to lose and what sectors gain from the EPAs? Third, what are the welfare implications for the African countries from the EPAs? Fourth, how will the formation of EPAs affect trade expansion through trade creation and trade diversion effects? Fifth, what are the potential fiscal implications of the EPAs? Lastly, what are the implications of the EPAs on regional integration? A key finding of the study is that full reciprocity will be very costly for Africa in terms of revenue losses, adjustment costs associated with de-industrialisation and its undermining effect of regional integration. Of major concern was this finding that even though the full reciprocity principle appears to be trade expanding globally (singularly in favour of EU), it will pose serious implications for deepening of regional integration in Africa. The benefits from regional integration efforts in Africa achieved so far are likely to be stymied by the EPAs since a significant portion of the trade gained by the EU will be due to trade diversion not only from the rest of the world but also from within the EPA groupings themselves that are configured around existing RECs. In deed, unless there are clear mitigating measures, the EPAs could seriously undermine the gains that have been achieved so far in the integration process of the continent. Only if there was focus on deepening African integration with a view to enhancing intra-African trade will the EPAs provide positive results. Nevertheless, unrestricted market access for Africa, which deals effectively with barriers associated with sensitive European products, was found to hold huge gains for the continent from the EPAs. In deed, even with full reciprocity, a free trade area that does not exclude sectors of export interest to Africa in the EU market and one that deals with non-tariff barriers promises positive results for African countries. The overarching conclusion from the study is that sequencing of EPAs will be critical to their success. The study recommends that the EPAs should first focus on deepening intra-African trade. This should be given sufficient lead-time to allow the African countries build the requisite competitiveness and should be accompanied with significant developmental programmes to complement the enlarged African market with increased supply and diversified capacities. Eventually, tariff dismantlement by the African countries towards full reciprocity should then be implemented in phases, hand-in-hand with unrestricted market access for the African exports into the EU market. Properly sequenced EPAs implementations would eventually offer annual welfare gains to SSA countries.

Suggested Citation

  • Karingi, Stephen & Lang, Rémi & Oulmane, Nassim & Perez, Romain & Sadni, Mustapha & Hammouda, Hakim Ben, 2005. "Economic and Welfare Impacts of the EU-Africa Economic Partnership Agreements," Conference papers 331389, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
  • Handle: RePEc:ags:pugtwp:331389
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    Cited by:

    1. Antoine Bouët & David Laborde & Fousseini Traoré, 2018. "The European Union–West Africa Economic Partnership Agreement: Small impact and new questions," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(1), pages 25-53, January.
    2. Oliver Morrissey, & Evious Zgovu, 2007. "The Impact of Economic Partnership Agreements on ACP Agriculture Imports and Welfare," Discussion Papers 07/09, University of Nottingham, CREDIT.
    3. 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).
    4. Jean-Marc Philip, 2006. "Le recours aux MEGC pour l’analyse de l’accord de partenariat économique entre l’union européenne et les pays ACP : une revue de la littérature," CAE Working Papers 92, Aix-Marseille Université, CERGAM.
    5. Khadan, Jeetendra & Hosein, Roger, 2014. "Trade, Economic and Welfare impacts of the CARICOM-Canada Free Trade Agreement," MPRA Paper 54836, University Library of Munich, Germany.
    6. Brenton, Paul & Saborowski, Christian & Staritz, Cornelia & von Uexkull, Erik, 2009. "Assessing the adjustment implications of trade policy changes using TRIST (tariff reform impact simulation tool)," Policy Research Working Paper Series 5045, The World Bank.
    7. Leudjou, Roland, 2021. "Assessing the impacts of eliminating Non-Tariff Barriers in the framework of the African Continental Free Trade Area on Cameroons economy," Conference papers 330231, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    8. Richard Ilorah & Collins C. Ngwakwe, 2015. "Economic Partnership Agreements between African-Caribbean-Pacific countries and the European Union: revisiting contested issues," Journal of African Business, Taylor & Francis Journals, vol. 16(3), pages 322-338, September.
    9. Stephen N. Karingi & Romain Perez & Hakim Ben Hammouda, 2007. "Could Extended Preferences Reward Sub‐Saharan Africa's Participation in the Doha Round Negotiations?," The World Economy, Wiley Blackwell, vol. 30(3), pages 383-404, March.
    10. Axel Borrmann & Matthias Busse & Manuel De La Rocha, 2007. "Consequences of Economic Partnership Agreements between East and Southern African Countries and the EU for Inter- and Intra-regional Integration," International Economic Journal, Taylor & Francis Journals, vol. 21(2), pages 233-253.
    11. Khadan, Jeetendra & Hosein, Roger, 2014. "Trade, Economic and Welfare impacts of the CARICOM-Canada Free Trade Agreement," MPRA Paper 54836, University Library of Munich, Germany.
    12. Laurent Didier, 2016. "Accords de partenariat économique (APE) - SADC : le changement c'est maintenant," Post-Print hal-03546549, HAL.
    13. Fiankor, Dela-Dem Doe & Ehrich, Malte & Brümmer, Bernhard, 2016. "EU-African Regional Trade Agreements as a Development Tool to Reduce EU Border Rejections," GlobalFood Discussion Papers 244352, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    14. Fontagne, Lionel & Laborde, David & Mitaritonna, Cristina, 2008. "An Impact Study of the Economic Partnership Agreements (EPAs) in the Six ACP Regions," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44194, European Association of Agricultural Economists.
    15. Chris Milner, & Oliver Morrissey, & Evious Zgovu, 2007. "Adjusting to Bilateral Trade Liberalisation under an EPA: Evidence for Mauritius," Discussion Papers 07/11, University of Nottingham, CREDIT.
    16. Ben Hammouda, Hakim & Karingi, Stephen & Ouedraogo, Ben Idrissa & Oulmane, Nassim & Sadni-Jallab, Mustapha, 2005. "Assessing the consequences of the Economic Partnership Agreement on the Ethiopian economy," Conference papers 331395, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Berisha-Krasniqi, Valdete & Bouet, Antoine & Mevel, Simon, 2008. "Economic partnership agreements between the European Union and African, Caribbean, and Pacific Countries: What is at stake for Senegal," IFPRI discussion papers 765, International Food Policy Research Institute (IFPRI).
    18. Ben Hammouda, Hakim & Karingi, Stephen & Njuguna, Angelica & Sadni Jallab, Mustapha, 2006. "Diversification: towards a new paradigm for Africa’s development," MPRA Paper 13359, University Library of Munich, Germany.
    19. Edgar Ntasano, 2010. "The Economic Partnership Agreements with the European Union," Insight on Africa, , vol. 2(2), pages 145-155, July.
    20. Karingi, Stephen & Perez, Romain & Oulmane, Nassim & Lang, Rémi & Sadni Jallab, Mustapha, 2006. "Assessment of the Impact of the Economic Partnership Agreement between the COMESA countries and the European Union," MPRA Paper 13294, University Library of Munich, Germany.
    21. Cissokho, Lassana, 2010. "Dynamic Effects of an Economic Partnership Agreement: Implications for Senegal," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 97622, Southern Agricultural Economics Association.
    22. 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).
    23. Brenton, Paul & Hoppe, Mombert & Newfarmer, Richard, 2008. "Economic partnership agreements and the export competitiveness of Africa," Policy Research Working Paper Series 4627, The World Bank.

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    Keywords

    International Development; Agricultural and Food Policy;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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