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A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization

Author

Listed:
  • Elbehri, Aziz

    (Economic Research Service, USDA)

  • Hertel, Thomas

    (Global Trade Analysis Project, Purdue University)

Abstract

on detailed plant-level data, is used to contrast the impacts of the Morocco-EU free trade area (FTA) to multilateral trade liberalization on Morocco’s economy. Simulation results show that the FTA agreement is likely to have adverse effects on Morocco due to: (a) deteriorating terms of trade, (b) reductions in output per firm in industries dominated by scale economies, (c) diversion of imports away from relatively low cost, non-EU suppliers, and (d) potentially adverse effects on the aggregate demand for labor which could exacerbate already high levels of unemployment. We contrast this FTA with a multilateral liberalization scenario along the lines of those proposed under the Doha Development Round and find this to be more beneficial to Morocco, despite the associated income transfer from the EU to Morocco. The difference may be attributed to: (a) lesser terms of trade losses, (b) positive scale effects, (c) non-preferential liberalization of imports into Morocco, and (d) a positive impact on aggregate labor demand and hence unemployment. We conclude that Morocco would be better off pursuing trade liberalization in the multilateral arena.

Suggested Citation

  • Elbehri, Aziz & Hertel, Thomas, 2006. "A Comparative Analysis of the EU-Morocco FTA vs. Multilateral Liberalization," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 496-525.
    • Handle: RePEc:ris:integr:0367
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    References listed on IDEAS

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    Cited by:

    1. Mouna Cherkaoui & Ayache Khellaf & Abdelaziz Nihou, 2011. "The Price Effect of Tariff Liberalization in Morocco: Measuring the Impact on Household Welfare," Working Papers 637, Economic Research Forum, revised 10 Jan 2011.
    2. Erbil, Can, 2001. "Trade Taxes are Better?!?," Conference papers 330921, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Chandrima Sikdar & Biswajit Nag, 2011. "Impact of India-ASEAN Free Trade Agreement: A cross-country analysis using applies general equilibrium modelling," Working Papers 10711, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    4. Sayef Bakari & Mohamed Mabrouki, 2019. "The Relationship Between Economic Growth, Exports And Imports In Morocco: An Empirical Validation Based On Var Modeling Techniques And Causality In The Meaning Of Granger," Journal of Smart Economic Growth, , vol. 4(3), pages 47-55, December.
    5. Rolleigh, Michael, 2006. "Plant Heterogeneity and Applied General Equilibrium Models of Trade: Lessons from the Canada-US Free Trade Agreement," Conference papers 331563, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Sabine Mage-Bertomeu, 2006. "Les modèles d'équilibre général appliqués à la politique commerciale : développements récents," Revue d'économie politique, Dalloz, vol. 116(3), pages 357-381.
    7. Sadni Jallab, Mustapha & Abdelmalki, Lahsen, 2007. "The Free Trade Agreement Between the United States and Morocco: The Importance of a Gradual and Assymetric Agreement," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 852-887.
    8. Kore Marc Guei, 2019. "Does financial structure matter for economic growth: evidence from South Africa," Economics Bulletin, AccessEcon, vol. 39(3), pages 1941-1957.
    9. Badri Narayanan G. & Vasundhara Rungta, 2014. "Export Subsidy Reforms and Productivity Improvements: The Case of the Indian Textile and Clothing Sector," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 8(3), pages 327-352, August.
    10. Hess, Sebastian, 2005. "An Econometric Model of CGE Simulations," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24713, European Association of Agricultural Economists.
    11. Lee, Donna J. & Zhang, J., 2006. "Estimating Global Environmental Implications of Agricultural Trade Liberalization: A Computable General Equilibrium Analysis," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25290, International Association of Agricultural Economists.
    12. Tchouamou Njoya, Eric, 2020. "An analysis of the tourism and wider economic impacts of price-reducing reforms in air transport services in Egypt," Research in Transportation Economics, Elsevier, vol. 79(C).
    13. Kavallari, Aikaterini & Schmitz, P. M., 2012. "Preference erosion effects on the agricultural sector of the EU’s Mediterranean Partner Countries," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 11(2), pages 1-15.
    14. Kavallari, Aikaterini & Borresch, Rene & Schmitz, P. Michael, 2006. "Modelling agricultural policy reforms in the Mediterranean basin - Adjustments of AGRISIM," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10074, European Association of Agricultural Economists.
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    More about this item

    Keywords

    Applied general equilibrium; Market Structure; Trade liberalization; Developing economies; Morocco;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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