Liberalizing EC Imports of Footwear from Eastern Europe
We present a simple computable model of EC footwear production and trade coupled with a rudimentary production model for Eastern Europe. We simulate the liberalization of EC footwear imports from Eastern Europe as planned under the so-called Europe Agreements. We find that if Eastern Europe can improve its productivity modestly both East and West can gain significantly from liberalization. These gains are concentrated on the EC-North, however, while the major footwear producing areas of the EC lose. The benefits of liberalization to Eastern Europe do not depend strongly on their gaining preferential access to the EC -- they persist even if all suppliers to the EC have free access.
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