Will the Economic Partnership Agreements foster the Sub-Saharan African Development?

Since 2002, the Sub-Saharan African countries2 embarked on the negotiations of free-trade agreements with the European Union (EU). As a result of these agreements, which will gradually replace the Cotonou/Lomé scheme, these countries will have to eliminate their tariffs on substantially all their European imports. Based on a general equilibrium analysis, this study estimates the potential effects of the EU-Sub-Saharan African trade liberalization. It underlines that an abrupt complete elimination of the tariffs on the African imports from the EU would pose severe challenges for Africa, as exemplified by the decline in welfare equivalent to USD 0.6 billion, as well as major fiscal losses and trade imbalances. Furthermore, the intra-African regional trade would be hit by the surge in European imports, weakening the regional integration process. The paper also investigates the impact of the EPAs, in the more realistic case where the African countries are entitled to reciprocate tariff elimination partially. It shows that the “standard” EU proposal, whereby the ACP countries cut their tariffs on 80% of their European imports, is not enough to maintain the fiscal, industrial and trade balances of the African countries. Only a higher level of asymmetry between the ACP and European commitments could preserve the African output, and, to a lesser extent, the fiscal revenues of the African government. However, this asymmetry will not completely avoid the trade imbalances, deindustrialization threat, or its undermining effect on regional integration as the EPAs will definitely divert intra-African trade.