Study, The Journal of Development Studies, 5 July 2007
The European Union is currently negotiating free trade agreements, called Economic Partnership Agreements (EPAs), with African countries as part of the Cotonou Agreement between the European Union and African, Caribbean and Pacific countries. The paper empirically assesses the impact of the EPAs on trade flows and government revenue for 14 West African countries. The results indicate that the decline in import duties due to the preferential tariff elimination might be of some cause for concern and that complementary fiscal and economic policies have to be implemented before or at the time the EPAs come into force [...........] So far, no study has estimated the trade effects and fiscal impact of the EPAs on West African countries. This paper tries to fill that gap, using a comprehensive dataset which draws on various sources, some of which were not available a short while ago. Accordingly, the paper is organised as follows: The methodology and the data used are explained in the following section, whereas the empirical results are presented in Section III. Importantly, the analysis focuses on the impact of the EPAs on West African countries only and not on the European Union, as the effects for the EU are likely to be very small. In particular, it focuses on the trade and budget effects that might occur if West African countries open up their domestic markets. Based on the results, the final section discusses various policy implications for ECOWAS countries, summarises the major results of this paper and ends with some concluding remarks.
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Author(s): Matthias Busse, Harald Grossmann