Some Simple Analytics of the Trade and Welfare Effects of Economic Partnership Agreements

The Free Trade Agreement between the United States and Morocco: The Importance of a Gradual and Assymetric Agreement

“…The only point of convergence between the partial and general equilibrium models is that it is still possible within a partial equilibrium model to analyze the trade policy effects on trade creation and diversion, welfare and tariff revenues while holding everything else constant. Milner et al (2002) provide a simple analytical framework explaining the theory behind partial equilibrium modelling and note that to adequately capture the interactions between sectors and elasticities of substitution between factors, and to simulate dynamic effects in their EPA study between the EU and the East African Community, a general equilibrium model would be desirable. However, partial equilibrium models would work as an alternative due to scarcity of individual and regional CGE models for developing countries.…”

“…However, partial equilibrium models would work as an alternative due to scarcity of individual and regional CGE models for developing countries. Milner et al (2002) also observed that the database for general equilibrium models lacks the details on commodities needed to take into account specific sensitive and special products that are of interest to both the Sub-Saharan African countries and the EU. A partial equilibrium framework is in a better position, in spite of its shortcomings, to allow for the utilization of the now widely available trade data at the appropriate level of detail that would allow for the principle of special and differential treatment to be captured in the simulation analysis.…”

Assessing Africa?s Two Billion Populated Market by 2063: The Facts and Fallacies of a Continental Free Trade Area (CFTA)

“…They concluded that African countries needed a more diversified export base, in order to enable them to produce a variety of products that improve trade exchanges within CFTA members and help reduce trade diversion effects. However, despite these poor indices of complementarity within African regions, their study demonstrated a huge potential in intraAfrican trade, most especially in vertically differentiated goods [19][20][21][22][23][24].…”

PARTIAL EQUILIBRIUM ANALYSIS TO DETERMINE THE IMPACTS OF a SOUTHERN AFRICAN CUSTOMS UNION-EUROPEAN UNION ECONOMIC PARTNERSHIP AGREEMENT ON BOTSWANA’S IMPORTS

“…Finally, the conclusion and limitations section is presented. Milner et al (2005) investigated the impact of an African Carribean Pacific-EU EPA on East African Cooperation (EAC)-that is, Kenya, Tanzania and Uganda and concluded that the welfare effects (excluding revenue effects) of the EU agreement will be small. Be it positive or negative there would be short-run adjustment costs mainly in the form of tariff revenue losses.…”

“…The authors predicted an increase in EU imports because of trade creation, trade diversion and consumption effects due to tariff rates reduction for EU products. Although welfare increased due to trade creation and consumption effects, Milner et al (2005) noted high negative effects as some of the trade was diverted from efficient non-EU members. Tanzania's overall welfare fell by 9billion TZSH or 0.5% of GDP.…”