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Assessing the economic impacts of an economic partnership agreement on Nigeria

Author

Listed:
  • Andriamananjara, Soamiely
  • Brenton, Paul
  • von Uexkull, Jan Erik
  • Walkenhorst, Peter

Abstract

This study discusses potential economic implications for Nigeria of an Economic Partnership Agreement with the European Union. It uses the World Bank’s Tariff Reform Impact Simulation Tool to assess the effects of preferential tariff liberalization with respect to the European Union. The results suggest that the impact of an Economic Partnership Agreement on total imports into Nigeria will be slight. This is in part because the Agreement will likely allow the most protected sectors to be excluded from liberalization, and also because where substantial tariffs are involved much of the increase in imports from the European Union will occur at the expense of other suppliers of imports. It is this trade diversion, arising from the discriminatory nature of the EPA, which generates a negative welfare impact of the tariff reforms. One way for Nigeria to limit these losses is to pursue non-preferential trade liberalization before implementing an EPA. The paper looks at the large number of import bans in Nigeria and argues that the positive impact on welfare of removing these import bans is likely to be substantial. Their removal would undermine a major reason for cross border smuggling and pave the way for a return to normal regional trade flows. The paper shows how an Economic Partnership Agreement presents an opportunity for accelerating the reforms that are needed to support a strategy to increase regional and global trade integration. Such an agreement is more likely to have positive and significant impacts when integrated into a comprehensive strategy toward competitiveness and alleviation of the supply constraints that have stifled the impact of previous trade agreements. Key issues that should be addressed include liberalization and regulatory strengthening of services sectors to ensure that all firms in Nigeria have access to efficiently produced backbone services and initiatives to address the country’s poor trade logistics performance.

Suggested Citation

  • Andriamananjara, Soamiely & Brenton, Paul & von Uexkull, Jan Erik & Walkenhorst, Peter, 2009. "Assessing the economic impacts of an economic partnership agreement on Nigeria," Policy Research Working Paper Series 4920, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4920
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    Citations

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    Cited by:

    1. 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.
    2. Susanne Fricke & Bianka Dettmer, 2014. "Backbone services as growth enabling factor - an Input-Output analysis for South Africa," Jena Economic Research Papers 2014-016, Friedrich-Schiller-University Jena.
    3. Omid Karami & Mina Mahmoudi, 2018. "Estimating Trade-Related Adjustment Costs in the Agricultural Sector in Iran," Papers 1806.04238, arXiv.org.

    More about this item

    Keywords

    Free Trade; Trade Policy; Currencies and Exchange Rates; Debt Markets; Trade Law;
    All these keywords.

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