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Adjusting to Bilateral Trade Liberalisation under an EPA: Evidence for Mauritius

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  • Chris Milner,
  • Oliver Morrissey,
  • Evious Zgovu

Abstract

This paper estimates the impact and adjustment costs for Mauritius of eliminating tariffs on imports from the EU under an EPA, considering trade, revenue, welfare, production and employment effects, and considering the potential benefit of preserving preferential access to the EU market. Assuming ‘immediate’ complete elimination of all tariffs on imports from the EU, there is a small welfare loss (-0.17% of 2002 GDP) unless we include potential production gains (generating a welfare gain of 0.06% of GDP). Excluding up to 20% of imports as sensitive products, the overall welfare loss is -0.19% of GDP. However, potential adjustment costs are much greater than these low welfare effects suggest: tariff revenue will fall by 33-52% of 2002 levels, domestic (non-export) production will decline by almost a quarter and direct employment by 12% (about 11,000 jobs lost overall). Preferences under an EPA are unlikely to support any growth in the major export sectors (sugar and garments), so absorbing the adjustment costs will be difficult.

Suggested Citation

  • Chris Milner, & Oliver Morrissey, & Evious Zgovu, 2007. "Adjusting to Bilateral Trade Liberalisation under an EPA: Evidence for Mauritius," Discussion Papers 07/11, University of Nottingham, CREDIT.
    • Handle: RePEc:not:notcre:07/11
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    References listed on IDEAS

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    1. Oliver Morrissey, & Evious Zgovu, 2007. "The Impact of Economic Partnership Agreements on ACP Agriculture Imports and Welfare," Discussion Papers 07/09, University of Nottingham, CREDIT.
    2. Matthias Busse & Harald Grossmann, 2007. "The trade and fiscal impact of EU/ACP economic partnership agreements on West African countries," Journal of Development Studies, Taylor & Francis Journals, vol. 43(5), pages 787-811.
    3. Sadni Jallab, Mustapha & Karingi, Stephen & Oulmane, Nassim & Perez, Romain & Lang, Rémi & Ben Hammouda, Hakim, 2005. "Economic and Welfare Impacts of the EU-Africa Economic Partnership Agreements," MPRA Paper 12875, University Library of Munich, Germany.
    4. Chris Milner & Oliver Morrissey & Andrew McKay, 2005. "Some Simple Analytics of the Trade and Welfare Effects of Economic Partnership Agreements," Journal of African Economies, Centre for the Study of African Economies, vol. 14(3), pages 327-358, September.
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    Cited by:

    1. Sukati, Mphumuzi A, 2010. "The Economic Partnership Agreements (EPAs) and the Southern African Customs Union (SACU) Region- The Case for South Africa," MPRA Paper 25103, University Library of Munich, Germany.
    2. Osman, Rehab Osman Mohamed, 2012. "The EU Economic Partnership Agreements with Southern Africa: a computable general equilibrium analysis," Economics PhD Theses 0412, Department of Economics, University of Sussex Business School.
    3. Oliver Morrissey, 2008. "Investment Provisions in Regional Integration Agreements for Developing Countries," Discussion Papers 08/06, University of Nottingham, CREDIT.
    4. Chris Milner & Oliver Morrissey & Evious Zgovu, 2009. "EU-ACP Economic Partnership Agreements and ACP Integration," Discussion Papers 09/05, University of Nottingham, CREDIT.
    5. Rehab O. M. Osman, 2015. "SADC Trade with the European Union from a Preferential to a Reciprocal Modality," South African Journal of Economics, Economic Society of South Africa, vol. 83(1), pages 23-40, March.

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