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

Abdelmalki, Lahsen; Sadni-Jallab, Mustapha; Sandretto, René

doi:10.2139/ssrn.988305

Cited by 2 publications

(3 citation statements)

References 7 publications

(4 reference statements)

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“…This would be welfare improving for South Africa because consumers of the imports whose prices fall would enjoy the goods at a lower cost. These findings are in line with the research of (Abdelmalki et al 2007) on the impact of FTA between the US and Morocco. In this case, the agreement led to a total welfare gain by Moroccan consumers because they had access to goods at lower prices.…”

Section: Trade Creation and Trade Diversionsupporting

confidence: 92%

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Revenue, welfare and trade effects of European Union Free Trade Agreement on South Africa

Guei

Mugano

Roux

2017

SAJEMS

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Background: Using the partial equilibrium WITS-SMART Simulation model to assess the impact of liberalisation under the Trade Development and Cooperation Agreement (TDCA) of a free trade area between the European Union and South Africa. The identification of the impact of such agreement allows for trade policy negotiation adjustment that can be beneficial for South Africa.Aim: The aim of the study is to estimate and discuss the impact of a Free Trade Agreement (FTA) with the European Union and South Africa. More specifically, the study intends to estimate the impact of revenue, welfare, imports, exports, trade creation and to come up with policies options for South Africa that can be used in negotiations and policy formulations.Setting: The study used international trade data (2012) available in the WITS-SMART model to assess bilateral trade agreement between the European Union and South Africa.Methods: To identify the impact on revenue, welfare, imports, exports and trade creation, the study simulated an FTA (0% tariff rate) for all goods exchanged between the European Union and South Africa. Also, the elasticity of substitution used for the simulation model was 99%.Results: The findings of the study reveal that total trade effects in South Africa are likely to surge by US$ 1.036 billion with a total welfare valued at US$ 134 million. Dismantling tariffs on all European Union (EU) goods would be beneficial to consumers through net trade creation. Total trade creation would be US$ 782 million. However, South African producers are likely to contribute a trade diversion of US$ 254 million which has a negative impact on consumer welfare. The country might also experience a revenue loss amounting to US$ 562 million because of the removal of tariffs. In trade, the country’s exports and imports to the EU are expected to increase by US$ 12.419 million and US$ 1.266 million, respectively.Conclusion: The European Union–South Africa FTA would result in both trade creation and trade expansion effects. However, trade creation and revenue loss are potential threats. In order to mitigate revenue loss, government needs to consider alternative tax such as consumption tax on certain goods and value-added tax.

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Section: Trade Creation and Trade Diversionsupporting

confidence: 92%

“…Another study in the United States by Abdelmalki, Sandretto and Jallab (2007) assesses the FTA between the US and Morocco using the WITS-SMART Simulation Model. The findings showed that the FTA significantly reduced Moroccan tariff by more than US$ 147 million.…”

Section: Empirical Literaturementioning

confidence: 99%

Revenue, welfare and trade effects of European Union Free Trade Agreement on South Africa

Guei

Mugano

Roux

2017

SAJEMS

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“…As the focus of this study is based on a single market (South Africa), the application of the SMART PE model framework to this study is relevant. The research study emulates the methodology applied byAbdelkmalki, Jallab and Sandretto (2007), who applied the SMART PE model to explore the implications of trade liberalisation between the United States and Morocco.It is generally accepted that when import tariffs are abolished in post-AfCFTA negotiations, commodity prices will fall, leading to trade creation. Trade creation involves stimulating trade levels after the tariff liberalisation, leading to unproductive companies being outcompeted by more productive rivals Laird and Yeats (1986).…”

mentioning

confidence: 99%

The implications of the African Continental Free Trade Area on South African agricultural trade: An application of the partial equilibrium mode

Seti¹,

Daw²

2022

South African Journal of Economic and management Sciences

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Background: The African Continental Free Trade Area is currently a negotiated agreement that comprises 54 African countries and aims at eliminating trade barriers between its member states. Advocates of the Free Trade Area point to the numerous benefits of the agreement, though less has been said about the potential implications on economic strategic sectors such as the agricultural sector.Aim: The study explores the potential economic impact of a full tariff liberalisation as proposed under the African continental Free Trade Area on South African agricultural trade.Setting: A 100% tariff cut on agricultural commodities was simulated among all 54 members of the African Continental Free Trade Area.Methods: The study adopts the SMART partial equilibrium model to simulate the potential impact of a full tariff liberalisation as proposed under the African Continental Free Trade Area on South African agricultural trade.Results: The simulation revealed that South Africa will gain a total trade value of approximately US$199 million, and the total trade diversion from third parties will stand at US$42 million. South African agricultural commodities with the greatest export potential to the African market include sugar cane, maize, citrus fruit, cigarettes and sauces. Industries that are vulnerable to the free trade area include dairy, poultry, and vegetables. The full tariff liberalisation is projected to decrease South African’s export revenue.Conclusion: The study recommends that South African infant industries that are vulnerable to the agreement be listed in an exclusive list and that government should enhance the competitiveness of the affected industries.

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

Cited by 2 publications

References 7 publications

Revenue, welfare and trade effects of European Union Free Trade Agreement on South Africa

Revenue, welfare and trade effects of European Union Free Trade Agreement on South Africa

The implications of the African Continental Free Trade Area on South African agricultural trade: An application of the partial equilibrium mode

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