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

Author

Listed:
  • Luis Rivera

    (CLACDS-INCAE)

  • Hugo Rojas-Romagosa

    (CPB (the Hague))

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

  • Luis Rivera & Hugo Rojas-Romagosa, 2007. "Economic Implications of an Association Agreement between the European Union and Central America," IIDE Discussion Papers 20071001, Institue for International and Development Economics.
    • Handle: RePEc:lnz:wpaper:20071001
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    Citations

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    Cited by:

    1. 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.
    2. 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).
    3. Moreno ROMA & Paul HIEBERT, 2010. "Relative House Price Dynamics Across Euro Area and US Cities: Convergence or Divergence?," EcoMod2010 259600143, EcoMod.
    4. Rivera, Luis & Rojas-Romagosa, Hugo, 2010. "Human capital formation and the linkage between trade and poverty: the cases of Costa Rica and Nicaragua," Documentos de Proyectos 3785, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. 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.
    6. 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.

    More about this item

    Keywords

    EU-CAAA FTA; trade policy; free trade agreement; CGE models; bananas; sugar;
    All these keywords.

    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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