TRADE, REVENUE AND WELFARE EFFECTS UNDER AN ECONOMIC PARTNERSHIP AGREEMENT BETWEEN BURKINA FASO AND THE EUROPEAN UNION
Onogwu, G.O. | Arene, C.J.
This study estimates the impact on Burkina Faso of eliminating tariffs on imports from the EU under EPAs, considering trade, revenue and welfare effects. At complete elimination of tariffs on all products imports from trade classification sections (TDC 01-13) from the EU. Burkina Faso is likely to experience both welfare gains and losses depending on the values of imports of each trade classification section in question. The overall welfare effect relative to GDP tends to be very small and positive, but potential tariff revenue losses are enormous even when the country has up to fifteen - twenty-five years in which to implement the tariff reductions, unless with scope for tax substitution. EPAs effects are concentrated on those product sections where trade creation outweighs trade diversion such as Animal products, Vegetable products, Animal/Veg. products, Mineral products, and Textiles products. Besides, product sections with the greatest market opportunities for EU suppliers to displace any of the other suppliers, ECOWAS and/or ROW include sections where trade diversion outweighs trade creation effects, such as prepared foodstuffs, product of chemicals, plastics, raw hides & skin, etc. The sensitive products (SPs) to be excluded from tariff removal should include sections in which ECOWAS member nations are suppliers to regional importers so that excluding them as SPs would improve the welfare gain compared to estimates where tariff are removed from those products in which ECOWAS have zero potential. The results at this level of aggregation will provide useful information to the on-going negotiations between ECOWAS and the EU in determining Burkinabe's products to be exempted from tariff removal during EPAs based on the severity of the effects on varied trade classification (TDC) sections, among other considerations.
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