Delivering on Promises? The Expected Impacts and Implementation Challenges of the Economic Partnership Agreements between the European Union and Africa

Abstract

Economic partnership agreements (EPAs) mark a new era in economic relations between the European Union and African, Caribbean and Pacific (ACP) countries that will lead to reciprocal tariff liberalization. Model‐based impact assessments have become a powerful tool in trade negotiations and mixed results are reported for ACP countries. Given their set‐up within a neoclassical framework, these models neglect important issues such as impacts on employment, macroeconomic balances and adjustment costs. The structuralist computable general equilibrium model applied in this article for three African EPA regions addresses these shortcomings and shows negative macroeconomic and distributional effects and important adjustment costs associated with employment and public revenue losses. These results highlight the importance of policy responses to deliver on promises associated with EPAs, namely sustainable economic development. More generally, they show the importance of alternative models to understand implementation challenges and facilitate broader debates about bilateral trade agreements.

The EU-SACU economic partnership agreement: Resultant trends and patterns in SADC intraregional agricultural trade flows

“…In support of the notion, Geda and Yimer (2019) also highlight that within a union, tariff cuts do not result in much trade being created. Tröster et al (2019) further posit that the tariff reductions have drastically led to import competition, as well as to losses in tariff revenue, particularly for the SACU countries, who already suffer from weak industrial capacity.…”

Home Field Advantage? EU–ACP Economic Partnership Agreement Meeting Locations and Textual Tone

“…Much of the contention over the EPAs arose from the fact that it remains an open question as to what extent the agreements have or will benefit the ACP countries economically. While many model‐based economic analyses of the agreements suggested increases in ACP exports to the EU, and welfare gains for consumers, most also noted that losses to ACP countries in the form of forgone tariff revenue could dampen or even worsen overall (static) welfare (Busse and Lüehje, 2007; Tröster et al ., 2020). Additionally, part of the EPA's positive economic impact was predicated on a successful conclusion of the WTO's Doha Development Round which would ‘amplify the benefits from the EPA process’ (Hinkle and Schiff, 2004, p. 1331), and the stalling, and then collapse, of those talks meant those complementarities would not be realized.…”

Trade Liberalization and Fiscal Stability in Developing Countries: What Does the Evidence Tell Us?

“…Similarly, Tröster et al . () analyze the potential impacts of economic partnership agreements between the European Union and African, Caribbean, and Pacific countries using a structural CGE model and show that these agreements can have significant government revenue losses, among other impacts.…”