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Revenue, Welfare and Trade Effects of European Union Free Trade Agreement on South Africa

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  • GUEI, KORE MARC ANTOINE

Abstract

The study used the partial equilibrium WITS-SMART Simulation Model to assess the impact of liberalization under the Trade Development and Cooperation Agreement (TDCA) of a free trade area between the EU and South Africa. The findings of the study reveal that total trade effects in South Africa are likely to surge by US$1.036 billion with a total welfare valued at US$134 million. Dismantling tariffs on all EU goods would be beneficial to consumers through net trade creation. Total trade creation would be US$782 million. However, South African producers are likely to contribute a trade diversion of US$254 million which has a negative impact on consumer welfare. The country might also experience a revenue loss amounting to US$562 million due to the removal of tariffs. On trade, the country’s export and import to the EU is expected to increase by US$12.419 million and US$1.266 million respectively. To mitigate revenue loss, the country should try to diversify its current tax base.

Suggested Citation

  • Guei, Kore Marc Antoine, 2017. "Revenue, Welfare and Trade Effects of European Union Free Trade Agreement on South Africa," MPRA Paper 92964, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92964
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    Cited by:

    1. Glenn Jenkins & Shahrzad Safaeimanesh, 2021. "Estimation of the Potential Economic Welfare Gains to SACU from Trade Facilitation," Working Paper 1462, Economics Department, Queen's University.

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    More about this item

    Keywords

    Revenue; Welfare; Trade Effects; EU FTA; South Africa;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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