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An Egypt-United States Free Trade Agreement: Economic Incentives and Effects

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  • Hoekman, Bernard
  • Konan, Denise
  • Maskus, Keith

Abstract

This paper explores the economic impact of a free trade agreement (FTA) between Egypt and the United States, assuming that Egypt implements both the recently agreed Arab League FTA and a Partnership Agreement with the European Union. An Egypt-United States agreement would improve Egypt’s economic welfare. Gains would be maximized if the agreement were to greatly reduce the prevalence of non-tariff barriers and ‘red tape’ costs, something that does not appear to be likely under the Arab and EU FTAs. If so, the modelling exercise suggests that both welfare and US exports to Egypt would rise significantly. Arab countries should not be concerned with an Egypt-United States agreement, as there are no major implications for exports to Egypt. The share of Egypt’s imports originating in the rest of the world declines significantly under the FTA scenarios, however. This is costly to both Egypt and to these trading partners. Such costs can be avoided if external trade barriers are lowered in conjunction with the implementation of the various FTAs.

Suggested Citation

  • Hoekman, Bernard & Konan, Denise & Maskus, Keith, 1998. "An Egypt-United States Free Trade Agreement: Economic Incentives and Effects," CEPR Discussion Papers 1882, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1882
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Denise KONAN & Bernard HOEKMAN, "undated". "Deepening Egypt-US Trade Integration: Economic Implications of Alternative Options," Middle East and North Africa 330400039, EcoMod.
    2. Denise Eby Konan & Karl E. Kim, 2004. "Beyond Border Barriers: The Liberalisation of Services Trade in Tunisia and Egypt," The World Economy, Wiley Blackwell, vol. 27(9), pages 1429-1447, September.
    3. Thissen, Mark, 1998. "Two decades of CGE modelling lessons from models for Egypt," Research Report 99C02, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

    More about this item

    Keywords

    Arab league; Egypt; Free Trade Agreements; US trade policy;

    JEL classification:

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

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