Free Trade Area

Using a comparative-static general equilibrium model and in the context of the western hemisphere, this paper compares the economic effects of a "hub-and-spokes (HAS)" type of bilateral trade configuration (with Chile being the hub) with those of a more comprehensive regional FTA (namely, the FTAA). The model is augmented to account for the possibility of technology spillovers and its effective

We incorporate intermediate inputs into a small-union general-equilibrium model and develop the welfare economics of preferential trading under the rules of origin. Combining this analysis with the Grossman-Helpman political-economy model, we demonstrate that the rules of origin can improve the political viability of FTAs. Two interesting outcomes are derived. First,

). Il s'agit d'une modification majeure de la politique commerciale du Sénégal qui bénéficie aujourd'hui d'un accès préférentiel relativement favorable vers les marchés européens, mais aussi vers le marché américain, et applique des tarifs peu discriminatoires. La réforme APE impliquerait une faible amélioration de l'accès au marché pour les exportateurs sénégalais, et une forte ouverture de cette économie aux produits européens. En outre, la réforme impliquerait une perte de recettes tarifaires substantielle pour le Sénégal. Les APE entraineraient donc pour le Sénégal peu de flux commerciaux supplémentaires et beaucoup de détournement de commerce. En utilisant le modèle MIRAGE de l'économie mondiale cet article étudie l'impact potentiel des APE et confirme largement les craintes émises par ces pays sur l'efficacité de ces accords.

The EU-sponsored Barcelona conference in 1995 set the ambitious goal of creating the Euro-Mediterranean Free Trade Area (EUROMED) that would include the European Union and the MENA countries by 2010. The intermediate steps towards building the EUROMED have involved bilateral "vertical" trade liberalization between the EU and the particular MENA countries as well as "horizontal" trade liberalization among themselves. In this paper we evaluate empirically the effects of the new EU Association Agreements with the MENA countries using the augmented gravity equations derived from a variety of neoclassical and new trade theory models and panel data for the period 1980-2004. We find that while these agreements increased significantly imports of the MENA countries from the EU they had no positive impact on their exports to the EU which can be attributed to the asymmetry in trade liberalization between the EU and the MENA countries.

This paper examines the determinants of export flows of countries in the ASEAN Free Trade Area (AFTA) through estimations of panel data using a gravity model. In particular, the paper employs the Hausman-Taylor (HT) estimation for a country panel data of thirty-nine countries during the period 1988-2002 based on a two-way error component form of the gravity model. The estimations show that export flows increased proportionately with GDP, and that the formation of AFTA has resulted in significant trade creation among its members. Finally, the paper suggests that trade facilitation policy can play an important role in setting the stage for AFTA's transition to a Free Trade Area.

Two large applied general equilibrium models, GTAP and MONASH, are used in this paper to simulate the elimination of trade barriers among the members of APEC. These models focus respectively on global trading relations and on the detailed sectoral, occupational, and regional dimensions of the Australian economy. We find that the mature industrialized members of APEC are likely to experience

FAQs about rules of origin and cumulation of origin
A booklet in which you can find answers to the questions you may have about preferential rules of origin and the Pan-Euro-Mediterranean cumulation system, the world's largest free trade area which comprises the European Union, EFTA States, Turkey, Mediterranean countries (from Lebanon to Morocco) and has included the Balkan countries as of 2013.

Tercihli menşe kuralları ve Türkiye, Avrupa Birliği, EFTA Devletleri ile beraber Akdeniz ülkelerinin (Fas'tan Lübnan'a uzanan hat) ve 2013'ten itibaren Balkan ülkelerinin de dahil edildiği - halen dünyanın en büyük serbest ticaret alanı - durumundaki Pan-Avrupa-Akdeniz menşe kümülasyonu sistemi hakkında aklınıza takılabilecek suallere cevap bulabileceğiniz bir kitapçık.

Makalah ini dibuat untuk menjadi bahan pertimbangan kebijakan terkait persaingan usaha, khususnya persaingan usaha yang dihadapi oleh UMKM di Provinsi Banten terkait pelaksanaan FTA.
Pengumpulan data dilakukan dengan observasi ke lokasi UMKM, wawancara rahasia, FGD, dan studi pustaka.

The rapid growth in the number of regional trade agreements (RTAs) has led to concern about the weakening of the multilateral trading system. This paper looks at the spread of such agreements and the extent to which they pose a threat to the system.

Makalah ini menganalisis Free Trade Area ataupun yang dikenal dengan Perdagangan Bebas secara umum dan detail. Disamping itu, makalah ini juga menyajikan berbagai contoh Free Trade Area yang telah disetujui oleh berbagai negara diatas sebuah Agreement yang telah diratifikasi.Struktur-struktur dan tata cara pembuatan Agreement dalam Free Trade Area juga disajikan dalam Makalah ini. Akhir dari makalah ini adalah menjelaskan Free Trade Area dalam tiga lingkup yaitu: Multilateral, Bilateral, dan Regional.

Preferential rules of origin and the Pan Euro-Mediterranean cumulation system
This book aimed to provide public officials, economic operators, students and other interested parties with information about the basic origin concepts and the rules origin in the origin protocols or annexes attached to free trade agreements and in particular about the Pan-Euro-Mediterranean cumulation system, and in this context, on the rules of origin applicable in the preferential trade between Turkey and the countries participating in the Euro-Mediterranean Partnership (i.e. the Barselona process)

Kitabın amacı genel olarak temel menşe kavramları ile serbest ticaret anlaşmalarının eki menşe protokollerinde yer alan menşe kuralları, özel olarak, Pan-Avrupa-Akdeniz Menşe Kümülasyonu sistemi ve bu kapsamda, Türkiye'nin Pan-Avrupa ülkeleri ve Avrupa-Akdeniz Ortaklığına (Barselona sürecine) katılan ülkeler ile tercihli ticaretinde uygulanan menşe kuralları hakkında bilgi sahibi olmak isteyen kamu görevlileri, ekonomik operatörler, öğrenciler ve ilgililere ayrıntılı bilgi vermektir.

The ghost of Berlin Conference (1884-1885) that partitioned Africa into specific spheres of influence has continued to haunt Africa many years after colonialism, reinforcing the fragmentation of African economies. The shadow of the Conference is still with us such that after over a century of pan-Africanism and five decades of regional integration in Africa, African economies remain decimated. This explains the reason why the announcement of the proposed Tripartite Free Trade Area (T-FTA) of the EAC-SADC-COMESA in eastern and southern Africa was received with both optimism and pessimism. The optimism concerning the prospects of the proposed T-FTA, though often exaggerated, is not totally unfounded as it could help African Economic Community (AEC) strengthen intra-RECs, and inter-RECs integration by reducing the incidence of multiple memberships and proliferation of regional economic groups and subgroups, among other things. With the use of qualitative method and some indices from the secondary sources, and by propounding a new theory of post-neo-functionalism, a combination or a synthesis of neo-nationalism and post-nationalism, this paper concludes that the proposed Tripartite Free Trade Area (T-FTA) would be confronted with some challenges capable of overcoming, impeding or confounding these prospects. The paper seeks to deconstruct and problematize neo-functionalism in African integration as well as rejects neo-functionalist, one-size-fits-all, state-centric or inter-governmental approach to integration in Africa, and rather recommends bottom-top, humanistic, people-centric or private-sector-driven approach to integration, or people-to-people integration. The study is essentially prognostic.

Abstrak ASEAN-Korea Free Trade Area (AKFTA) adalah kesepakatan antara negara-negara anggota ASEAN dengan Korea untuk mewujudkan kawasan perdagangan bebas dengan menghilangkan atau mengurangi hambatanhambatan perdagangan barang baik tarif ataupun non tarif, peningkatan akses pasar, sekaligus peningkatan kerjasama ekonomi dalam rangka meningkatkan kesejahteraan masyarakat ASEAN dan Korea. Seperti kerjasama ekonomi lainnya yang berusaha mewujudkan perdagangan bebas, kerjasama AKFTA ini juga bertujuan untuk memperlancar arus barang dan modal. Kerjasama ini menjalankan prinsip-prinsip perdagangan internasional yang dipromosikan oleh rezim perdagangan global World Trade Organization (WTO). Dalam Memorandum of Understanding (MoU) dapat diketahui bahwa ada banyak pihak yang terlibat dalam kerjasama ini. Secara umum, aktor utamanya dapat diklasifikasikan menjadi dua pihak saja yaitu ASEAN dan Pemerintah

Historically, integration in Africa preceded European colonialism and as well predated European integration. But in the scramble for Africa, the continent was partitioned into specific spheres of influence in the Berlin Conference (1884-1885) among the various European powers. This partitioning has continued to haunt Africa many years after colonialism, reinforcing the fragmentation of African economies. The shadow of the Conference is still with us such that after over a century of pan-Africanism and five decades of modern integration in Africa, African economies remain decimated. Yet all the hitherto existing theories of integration such as functionalism, neo-functionalism, complex interdependence, intergovermentalism, etc. are Euro-centric, western, parochial, or tailor-made for European integration, and therefore, not apt to explain the defects, failures and drawbacks of African integration. Thus, there is need to deconstruct them in the quest for paradigm shift for African integration. With the use of qualitative method and some indices from the secondary sources, and by propounding a new theory of post-neo-functionalism, a synthesis of neo-nationalism, post-nationalism and humanism, this paper concludes that the proposed Continental Free Trade Area (CFTA) would be confronted with some challenges capable of overcoming, impeding or confounding its prospects. The study is essentially critical and prognostic.

We consider the case of Economic Community of West African States (ECOWAS) which is one of the largest free trade areas in Africa. We examine whether the ECOWAS member countries have favourable economic characteristics to undertake a deeper economic integration, moving towards an economic union status. Under favourable condition, policymakers in the ECOWAS region can be persuaded to implement deeper economic integration. An increase in trade, resulting from deeper economic integration in the ECOWAS region, can compensate for fall in trade between ECOWAS, and rest of the world. Because of the global economic crisis, trade flow in the ECOWAS region has fallen besides adversely affecting regional macroeconomic variables: trade balance, current account balance, fiscal balance, investment and domestic credit. The poor state of macroeconomic variables has a direct impact in reducing mean income of the region, and indirectly might affect income distribution. Increase in trade in the ECOWAS is expected to generate resources to increase aggregate demand, and to meet regional development expenditures.

Zusammenfassung: This publication has been launched within the project “European Union–Republic of Moldova Trade Relations: Current Situation and Perspectives for Enhancement”. The project is sponsored by the Moldova-Soros Foundation. The major goal of this project ...

WAI-ZEI Paper No. 22 analyzes the regional integration process in Southern Africa, which is one of the oldest examples of regional integration. The Southern African Development Community (SADC), which was initially founded as a stronghold against the Apartheid regime in South Africa, has become a frontrunner among the so-called Regional Economic Communities (RECs) in Africa. Due to the disputed role of Zimbabwe in the region, to the weakness of regional institutions and to the membership of some countries in more than one REC, there are however deficits with regard to the practical implementation of regional goals. They particularly concern the transition from a Free Trade Area to a customs union. Against this background, members of three RECs in Southern and Eastern Africa, SADC, COMESA and EAC, have decided to adopt a so-called Tripartite Agreement in 2011. Through this agreement, a Free Trade Area for more than 600 Mio. people was established. This step was seen as an opportunity to re-boost the regional integration process in the southern part of Africa.

ABSTRACT & RÉSUMÉ & ZUSAMMENFASSUNG: Abstract: Francophone Africa has been dominated to date by the political, economic and cultural repercussions of France’s colonial rule. A major instrument to assert France's interests was the upkeep of a common monetary policy and currency, the CFA Franc. Although this has been increasingly resented by African politicians and economists, who wanted to replace it by a West African currency (the ‘Eco’) the CFA still prevails, due to the social network of French and African political leaders, the ‘messieurs Afrique’ who benefit from the system. Controversial international discussion concentrates on questions of sovereignty and formal political and economic questions. However, the rules of the informal sector proved to be at least as crucial in structuring the CFA-zone as the institutions and policies of the formal economic sector, including its monetary institutions. For decades, for example, prices of French imports were overpriced, due to protection by tied aid and other political and cultural non-tariff barriers to trade. The cost of this rent-seeking was carried not only by the French Treasury, who guarantees the peg, but by the French and EU taxpayers, who financed budgetary bail-outs and development aid, and last, but not least, by the poorer African member countries and social strata. Although this applies strictly speaking only to the CFA zone, there are strong indicators that things haven't changed much since then for Francophone Africa in general. The repercussions of rent-seeking in Francophone Africat impact up to date negatively on economic performance. For example, growth levels have been significantly lower since two decades compared with Anglophone competitors. ---------------------------------------------------------------------------------------------------------------------------------------------------- RÉSUMÉ : L'Afrique francophone a été dominée jusqu'à présent par les répercussions politiques, économiques et culturelles de la domination coloniale française. Contrairement à la domination coloniale « indirecte » de la Grande-Bretagne, Paris gouvernait ses (anciennes) colonies de manière plutôt autocratique, classiquement qualifiée de « pouvoir directe ». Un instrument majeur pour affirmer les intérêts de la France était le maintien d'une monnaie commune, le franc CFA. Bien que cela ait été de plus en plus ressenti par les politiciens et les économistes africains, qui voulaient le remplacer par une monnaie commune ouest-africaine (l' « Eco »), le CFA prévaut toujours. La discussion internationale controversée s'est concentrée sur les questions de souveraineté et les questions politiques et économiques formelles. Cependant, les règles du secteur informel ont été au moins aussi cruciales dans la structuration de la zone CFA que les institutions et les politiques du secteur économique formel, y compris ses institutions monétaires. Pendant des décennies, par exemple, les prix des importations françaises ont été surévalués, en raison de la protection par l'aide liée et d'autres obstacles politiques et culturels non-tarifaires au commerce. Le coût de cette recherche de rente a été supporté non seulement par le Trésor français, qui garantit le rattachement, mais aussi par les contribuables français et européens, qui ont financé les renflouements budgétaires et l'aide au développement, et enfin, mais non des moindres, par le membre le plus pauvre pays et couches sociales africaines. Bien que cela ne s'applique à proprement parler qu'à la zone CFA, il existe de forts indicateurs que les choses n'ont pas beaucoup changé depuis cette époque pour l'Afrique francophone en général. Les répercussions de la recherche de rente en Afrique francophone ont à ce jour un impact négatif sur les performances économiques. Par exemple, les niveaux de croissance sont nettement inférieurs depuis deux décennies par rapport aux concurrents anglophones. --------------------------------------------------------------------------------------------------------------------------------------- ZUSAMMENFASSUNG: Das frankophone Afrika war bisher von den politischen, wirtschaftlichen und kulturellen Auswirkungen der französischen Kolonialherrschaft geprägt. Im Gegensatz zur „indirekten“ Kolonialherrschaft Großbritanniens regierte Paris seine (ehemaligen) Kolonien eher autokratisch, was klassischerweise als „direkte Herrschaft“ bezeichnet wird. Ein wichtiges Instrument zur Durchsetzung der Interessen Frankreichs war die Beibehaltung einer gemeinsamen Währung, des CFA-Franc. Obwohl diese zunehmend von afrikanischen Politikern und Ökonomen abgelehnt wurde, die sie durch eine gemeinsame westafrikanische Währung (das „Eco“) ersetzen wollten, dominiert der CFA immer noch. Die kontroverse internationale Diskussion zum Thema konzentrierte sich bisher auf Fragen der Souveränität und formale politische und wirtschaftliche Fragen. Allerdings erwiesen sich die Regeln des informellen Sektors bei der Strukturierung der CFA-Zone als mindestens genauso entscheidend wie die Institutionen und Richtlinien des formellen Wirtschaftssektors, einschließlich seiner Währungsinstitutionen. Beispielsweise waren die französischen Importpreise über Jahrzehnte aufgrund von Preisbindungen und anderer politischer und kultureller nicht-tarifärer Handelshemmnisse überbewertet. Die Kosten dieses ‚Rentier-Kapitalismus‘ wurden nicht nur vom französischen Finanzministerium getragen, das die Bindung garantierte, sondern auch von französischen und europäischen Steuerzahlern, die Haushaltssanierung und Entwicklungshilfe finanzierten, und nicht zuletzt von den Ärmsten afrikanischen Mitgliedsländern und Gesellschaftsschichten. Obwohl dies streng genommen nur für die CFA-Zone gilt, gibt es starke Indikatoren dafür, dass sich seit dieser Zeit für das frankophone Afrika im Allgemeinen nicht viel geändert hat. Der Renten-Kapitalismus im frankophonen Afrika wirkt sich bis heute negativ auf die Wirtschaftsleistung aus. Beispielsweise sind die Wachstumsraten seit zwei Jahrzehnten im Vergleich zu anglophonen Wettbewerbern deutlich geringer.

Is world trade becoming more regionalized, as a result of preferential arrangements such as NAFTA, the Andean Pact and MERCOSUR? If so, is this deviation from the principle of MFN (nondiscriminatory trade policies) good or bad? This paper attempts to answer both questions.

ASEAN has been deepening intra-regional integration at the same time that it has been forming various cooperative arrangements with its partners, and its Member Countries have been pursuing individual trade accords. Which would be the optimal configuration for ASEAN? In this paper, we evaluate various economic scenarios for the region in terms of real-sector, financial, and macroeconomic cooperation with a view to gauge the best unit of integration. We review the current evolution of trade and financial accords in the region and survey the literature on the economic viability of these accords, including some fresh CGE simulations on the correlation of business cycles and the economic effects of potential trade groupings being considered. In general, the paper suggests that the economic potential for closer economic integration is strong. In terms of trade, we note that there would be positive gains from ASEAN integration and the current wave of bilateral free-trade areas, but that these gains are much less significant for ASEAN than would be the case of other scenarios, such as the ASEAN+3 or the Free Trade Area of the Asia-Pacific. We also argue that the case for deepening financial and monetary integration in Asia is convincing, even though the political underpinnings of such an accord are not yet in place.

y democrática de alternativa de desarrollo al proyecto de un Á rea de Libre Comercio entre las Américas (FTAA, por sus siglas en inglés). El documento explora los retos y oportunidades de la Alianza Social Hemisférica (HSA, por sus siglas en inglés) trazando un método del proceso político de la sociología de movimientos sociales, para construir alternativas políticas al plan del proyecto del FTAA. El argumento central es que mientras se logró un progreso significativo mediante la HSA al definir una base de consenso hemisférico para un plan político alternativo, permanece el reto de asegurar que el proceso de elaborar tales alternativas sea democrático e incluya a la base y a los sectores populares. Por un lado, debe haber un equilibrio entre la necesidad de la capacidad de ampliar la Alianza Social Hemisférica (HSA, por sus siglas en inglés), para movilizar a las fuerzas sociales críticas del continente en una campaña contra el FTAA y, por el otro lado, para asegurar la cohesión de una coalición que se amplía cada vez más bajo la tensión por la alineación de nuevos sectores y actores.

In recent years the European Union has sought to transform its trading regime with the ACP countries by advocating reciprocal free trade agreements with them through Economic Partnership Agreements (EPAs). This policy shift from preferential trade to free trade would imply drastic changes for Senegal?s economy, which currently enjoys relatively good access to European markets, but also to the US while applying a high domestic protection on all sources of imports. As a result, this type of reform would result in improved access to foreign markets only for the EU. Furthermore, the EPA implies a loss of tariff revenues from liberalization. Putting differently, this kind of reform could lead to trade diversion in Senegal and will not create much trade. Using the MIRAGE computable general equilibrium model the study examines the potential impact of Economic Partnership Agreements on ACP countries with a special focus on Senegal. JEL Classification : F13, F14, F15.

Zusammenfassung: This publication has been launched within the project “European Union–Republic of Moldova Trade Relations: Current Situation and Perspectives for Enhancement”. The project is sponsored by the Moldova-Soros Foundation. The major goal of this project ...

Summary and examination of negotiations aimed at the creation of the Free Trade Area of the Americas, with special attention to the positions of Mercosur countries.

The objective is to analyze the economic incentives, on the social and on the private level, of the different alternatives for trade liberalization. That is to say, information is processed to deeply understand the different negotiation scenarios, the bilateral as against the plurilateral alternative, considering aggregated as well as particular national interests in each country/region. The integration process involves many subjects (the harmonization of domestic policies on competition, environmental and labor standards, intellectual property, and so on) and sectors (now including services). Although many of these issues are mentioned and discussed, the focus here is on the changes in market access associated with the proposed liberalization of the trade opening for goods, the area in which MERCOSUR has its clearest interest.

We analyze a simple bargaining model in which countries form preferential trad- ing arrangements in order to improve their status quo positions during subsequent multilateral negotiations. This model provides a natural interpretation of preferen- tial trading arrangements as building and stumbling blocks, and predicts a novel role for the damage which customs unions inflict on outsiders. Variants on the model

The United States and the European Union include several environmental clauses in their respective preferential trade agreements (PTAs). Building on an exhaustive and fine-grained dataset of PTAs’ environmental clauses, this article makes two contributions. First, it shows that the United States and the European Union have initially favored different approaches to environmental protection in their PTAs. The United States’ concerns over regulatory sovereignty and level playing field have led to a legalistic and adversarial approach, while the European Union's concerns for policy coherence have led to a more procedural and cooperative approach. Second, this article provides evidence that European and American trade negotiators have gradually converged on a shared set of environmental norms. Although the United States and the European Union initially pursued different objectives, they learned from each other and drew similar lessons. As a result, recent American agreements have become more European-like, and European agreements have become more Americanized. This article concludes that U.S. and E.U. approaches, far from being incompatible, can usefully be combined and reinforce each other.

The main goal of regionalization is the creation of free trade areas and the guarantee for countries to accede to a widened market. Many studies dealing with the effects of regional free trade agreements on trade flows already exist in the economic literature and the explosion of regional agreements among nations has recently stressed the key role of regionalization. However, the effects of agreements on trade have not yet been clearly determined in those studies. Our research in this paper aims at reassessing the genuine role of associations. For this matter, we particularly study the association of Romania with European Union countries. Our econometric analysis based on qualitative choice models highlights in particular why European countries chose to conclude an association agreement with Romania, and stresses the fact that European Union countries select endogenously the conclusion of association agreements. We also find a 0.29 positive impact of the association agreement on Romanian export performances.

An applied general equilibrium model with oligopoly and scale economies, based 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 non-EU suppliers, and (d) potentially adverse effects on the aggregate demand for labor. We contrast this FTA with a multilateral liberalization scenario along the lines of those proposed under the Doha Development Round and find this more beneficial to Morocco, with overall welfare gains due 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. We conclude that Morocco would be better off pursuing trade liberalization in the multilateral arena.

The 1997/98 Asian currency crisis has led a once high-flying East Asia to realize its vulnerability to external shocks. This realization has given strong impetus to greater economic integration among East Asian economies, with the ASEAN-Korea Free Trade Area (AKFTA) a case in point. This paper qualitatively and quantitatively examines the economic feasibility of AKFTA: qualitatively using the theory of economic integration, and quantitatively by applying a CGE model. Our two-dimensional analysis provides some, but not overwhelming, support for AKFTA's prospects as an effective means of promoting trade between ASEAN and the Republic of Korea.

Trade liberalisation and economic integration are central to the success of the Treaty establishing the Common Market for Eastern and Southern Africa (COMESA) regional trading bloc. COMESA's liberalisation and integration programme boasts of a free trade area (FTA) launched in the year 2000 in which at least half of the twenty member states are currently participating. The regional bloc's integration programme is envisaged to be taken further through the formation of a customs union via a common external tariff (CET) planned to be in place by end of 2004. This study provides a quantitative assessment of the likely implications of the implementation of the COMESA Treaty to establish the FTA and then form a customs union through the CET. The focus of the analysis is on the implications of the accompanying trade liberalisation on macroeconomic aggregates including those that have a bearing on poverty reduction; industry structure; welfare; and the trade diversion versus trade creation question. The study uses a multi-country multi-commodity applied general equilibrium model ⎯ GTAP (Global Trade Analysis Project) ⎯ in its analysis. The study sought to provide empirical evidence relevant to the policy debate on the following questions. First, what countries gain and which lose based on the impacts on GDP, employment and other macroeconomic aggregates from the FTA and customs union. Second, based on the empirical evidence of the resulting industry structure from the FTA and customs union formation, what can be said on the question of whether COMESA should proceed at its current speed to be a customs union considering that some of its members are also members of the South African Development Cooperation (SADC), which also aims to move to a free trade area although at a reduced speed than COMESA. Third, using the simulation results of the implications of the FTA and customs union on value added in different sectors, can the study show what sectors lose and what sectors gain for each of the five COMESA member countries. Fourth, what are the welfare implications for the five COMESA member countries and which of them gains and which lose from the FTA and the customs union? Fifth, how does the formation of COMESA FTA and customs union affect trade expansion through the trade creation and trade diversion effects? The following are some of the findings of the study. COMESA is better of with free trade. There are positive economic gains for all regions from free trade. So the regional bloc should move to liberalise faster to realise the gains. While some countries will benefit more, the implementation of the liberalisation policies would need to be undertaken with long-run outcomes in mind. Second, the economic gains from the liberalisation process will need to be placed in perspective of the entire political and strategic interests of different member nations in COMESA. Policies to distribute gains equally and efficiently might also need to be formulated. Third, it is clear from the study that COMESA seems better off with a customs union. While FTA gives good outcomes, the customs union must be preferred. However, the analysis of our results have also suggested that the medium-term framework of the transition from FTA to a custom union may not be appropriate as the sectors where growth from the customs union would be optimised take longer to adjust. Fourth, the results from both the FTA and customs union implementation are clear that trade diversion will not take welfare gains away. So the counter arguments for free trade policy in the region are not so valid. Member nations should consider trade liberalisation as a serious policy. It is a policy that has potential to contribute to poverty reduction in the long-run especially from lower incidence of income poverty.

In this paper, an applied general equilibrium (AGE) model is used to assess the welfare results of alternative free trade areas (FTA) for three MERCOSUR countries, Brazil, Argentina and Uruguay. The results of the sensitivity to shocks and parameters are evaluated. In such a way, the robustness of the results to different degrees of intra-blocs trade liberalization and trade elasticities will be assessed. It is shown that welfare gains for Brazil are very robust to different degrees of trade liberalization, and allocation effects drive these gains. For Argentina and Uruguay, welfare gains depend heavily on a higher degree of liberalization, as they are connected to terms of trade effects. This paper shows that trade elasticities are important parameters driving the model's results, as welfare gains for Argentina and Uruguay in both scenarios are very sensitive to these parameters. Therefore, AGE models results of alternative FTA for Mercosur countries need to consider the uncertainty about parameters and shocks.

This paper provides an ex-ante assessment of the poverty and income distribution impacts of the Central American Free Trade Area agreement on Nicaragua. A general equilibrium macro model is used to simulate trade reform scenarios and estimate their price effects, while a micro module maps these price changes into real income changes at the individual household level. The final impact on poverty is not too large, but its dispersion across households is significant and should be considered when designing compensatory policies. A main policy message is that Nicaragua should consider enlarging its own liberalization to countries other than the United States to boost trade-induced poverty reductions.

La serie de Documentos de Trabajo en versión PDF puede obtenerse gratis en la dirección electrónica: http://www.bcentral.cl/esp/estpub/estudios/dtbc. Existe la posibilidad de solicitar una copia impresa con un costo de $500 si es dentro de Chile y US$12 si es para fuera de Chile. Las solicitudes se pueden hacer por fax: (56-2) 6702231 o a través de correo electrónico: [email protected].

Following lead, trade theorists have generally treated trade policy as exogenous in evaluating the welfare effects of preferential trading arrangements. The general approach has been to start with a tariff distorted equilibrium and ask whether a particular set of preferential tariff reductions between union partners is welfare-improving for each participating country, the union and the world as a whole.'