Economic and Welfare Impacts of the EU-Africa Economic Partnership Agreements.African Trade

This study tries to quantify the concerns that have been raised often on adjustment costs likely to be faced by African countries and makes recommendations of how the EPAs could be made to work in Africa’s favour. The study addresses the following questions. First, how are African countries likely to gain or lose from a bilateral trade liberalisation between Africa and the EU as governed by the EPAs reciprocity principle? Second, what sectors in Africa are most likely to lose and what sectors gain from the EPAs? Third, what are the welfare implications for the African countries from the EPAs? Fourth, how will the formation of EPAs affect trade expansion through trade creation and trade diversion effects? Fifth, what are the potential fiscal implications of the EPAs? Lastly, what are the implications of the EPAs on regional integration? A key finding of the study is that full reciprocity will be very costly for Africa in terms of revenue losses, adjustment costs associated with de-industrialisation and its undermining effect of regional integration. Of major concern was this finding that even though the full reciprocity principle appears to be trade expanding globally (singularly in favour of EU), it will pose serious implications for deepening of regional integration in Africa