An Impact Study of the Economic Partnership Agreements (EPAs) in the Six ACP Regions

This article provides a very detailed analysis of the trade-related aspects of Economic Partnership Agreement (EPA) negotiations. We use a partial equilibrium model - focusing on the demand side - at the HS6 level (covering 5,113 HS6 products). Two lists of sensitive products are constructed, focusing on the agricultural sectors, and tariff revenue preservation. For the European Union, EPAs must translate into 90 percent fully liberalized bilateral trade to be World Trade Organization (WTO) compatible,. We use this criterion to simulate EPAs for each negotiating regional block. ACP exports to the EU are forecast to be 10 percent higher with EPAs, than under the GSP/EBA option. ACP countries are forecast to lose an average of 70 percent of tariff revenues on EU imports in the long run, while imports from other regions of the world will continue to provide tariff revenues. Thus, if we compute tariff revenue losses on total ACP imports, losses are only 26 percent on average over the long run and as low as 19 percent of the product lists are optimized. The final impact depends on the importance of tariffs in government revenue and on potential compensatory effects. However, this long term and less visible effect will depend mainly on the capacity of each ACP country to reorganize its fiscal base