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Economic Implications of an Association Agreement between the European Union and Central America

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  • Rivera, Luis
  • Rojas-Romagosa, Hugo

Abstract

Using a global CGE model, we assess the potential macro-economic effects of a future European Union - Central American Association Agreement (EU-CAAA). Currently, many agricultural products from Central America (CA) enter duty-free to the European Union (EU); with two notable exceptions: bananas and sugar. We find that liberalizing the access to both products will bring significant gains to CA, while excluding them from the negotiations will bring no static gains. If trade facilitation mechanisms are implemented and we allow for the expected increase in FDI inflows to CA, welfare gains improve for all scenarios but are conditions on the level of EU agricultural liberalization.

Suggested Citation

  • Rivera, Luis & Rojas-Romagosa, Hugo, 2008. "Economic Implications of an Association Agreement between the European Union and Central America," Conference papers 331783, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331783
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    References listed on IDEAS

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    1. Anne O. Krueger, 1983. "Trade and Employment in Developing Countries, Volume 3: Synthesis and Conclusions," NBER Books, National Bureau of Economic Research, Inc, number krue83-1, January-J.
    2. Alice Amsden & Rolph van der Hoeven, 1996. "Manufacturing output, employment and real wages in the 1980s: Labour's loss until the century's end," Journal of Development Studies, Taylor & Francis Journals, vol. 32(4), pages 506-530.
    3. Koujianou Goldberg, Pinelopi & Pavcnik, Nina, 2003. "The response of the informal sector to trade liberalization," Journal of Development Economics, Elsevier, vol. 72(2), pages 463-496, December.
    4. Anne O. Krueger, 1983. "Trade and Employment in Less Developed Countries: The Questions," NBER Chapters, in: Trade and Employment in Developing Countries, Volume 3: Synthesis and Conclusions, pages 1-9, National Bureau of Economic Research, Inc.
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    2. Nelson B. Villoria, 2009. "China and the Manufacturing Terms-of-Trade of African Exporters," Journal of African Economies, Centre for the Study of African Economies, vol. 18(5), pages 781-823, November.
    3. Rivera, Luis & Rojas-Romagosa, Hugo, 2010. "Formación de capital humano y el vínculo entre comercio y pobreza: los casos de Costa Rica y Nicaragua," Documentos de Proyectos 3814, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Moreno ROMA & Paul HIEBERT, 2010. "Relative House Price Dynamics Across Euro Area and US Cities: Convergence or Divergence?," EcoMod2010 259600143, EcoMod.
    5. Vera Songwe & Jamie Alexander Macleod & Stephen Karingi, 2021. "The African Continental Free Trade Area: A Historical Moment for Development in Africa," Journal of African Trade, Springer, vol. 8(2), pages 12-23, December.
    6. Sánchez , Marco V. & Vos, Rob, 2007. "Domestic Linkages as a Condition for Gains from Free Trade Agreements: Welfare and Poverty implications of DR-CAFTA for Costa Rica and Nicaragua," Conference papers 331618, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Kakali Mukhopadhyay & Paul J. Thomassin & Debesh Chakraborty, 2012. "Economic Impact of Freer Trade in Latin America and the Caribbean: A GTAP Analysis," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 49(2), pages 147-183, November.
    8. Rivera, Luis & Rojas-Romagosa, Hugo, 2009. "Human Capital Formation and the Linkage between Trade and Poverty: The Cases of Costa Rica and Nicaragua," Conference papers 331887, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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