trade policy options for nigeria: a gtap simulation analysis

Trade Policy options for Nigeria: a GTAP simulation analysis

by

Ron Sandrey, Hans Grinsted Jensen and Olubukola Oyewumi

tralac Working Paper No 10/2007

December 2007


WP10/2007 tralac | December 2007

Copyright © tralac, 2007.

Readers are encouraged to quote and reproduce this material for educational, non-profit

purposes, provided the source is acknowledged. All views and opinions expressed remain

solely those of the authors and do not purport to reflect the views of tralac.

This publication should be cited as: Sandrey, Ron, Jensen, Hans G. and

Oyewumi, Olubukola. 2007.


tralac Working Paper No. 10. [Online]. Available: www.tralac.org.

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Trade Policy options for Nigeria: a GTAP simulation analysis WP10/2007 tralac | December 2007

Section 1 – Summary and key points

Nigeria is the most populous country in Africa, but a low income country by the World Bank

definitions. Fuels and mining products completely dominate exports, and the US and the EU

are the destination for 73% of these exports. Nigeria has effectively duty-free access into

both of these destinations, but domestically its own tariffs are high by international standards.

The oil sector also dominates production in the economy, and recent high oil prices have

ensured a strong trade surplus.

The stalling of the talks in the Doha Round of the WTO in Geneva is leading to questions

about the value of such a round for Africa, and similarly there are many who question the

value of the possible Economic Partnership Agreements (EPA) proposals for the African,

Caribbean and Pacific (ACP) countries. To analyse this for Nigeria this paper uses the

Global Trade Analysis Project (GTAP) computer model1 to simulate (a) a likely outcome for

Nigeria from the Doha Round and (b) the impacts for Nigeria of going one step past the EPA

negotiations and entering into a full free trade agreement (FTA) with the EU.

To set the scene a preamble to the WTO is provided. This includes the major issues from

the agricultural negotiations in the WTO and a review of some of the more recent analyses of

a likely Doha Round outcome for Africa. The striking feature of the latter is that the

estimated benefits to agriculture globally are reducing as (1) the limitations of a likely

outcome from Doha are being realised and (2) more realistic trade modelling is being done

by researchers.

The likely Doha outcome

An important part of the model assumptions is that there will be a degree of flexibility that

enables countries to preserve their tariff protection on a few selected lines, and this

protection is allocated by the model to the most heavily protected tariff lines (the so-called

special and sensitive products).

The overall global welfare gains from Doha are estimated to be some $48.2 billion, with a

lesser $3.27 billion of this from agricultural reform and the greater $45 billion from the

liberalisation of markets for non-agricultural goods. The agricultural results are reinforcing

1 For a full background to GTAP visit the website at https://www.gtap.agecon.purdue.edu. This truly global project has become the model and/or database of choice for most trade and trade related modellers.

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the ‘modern’ GTAP outcomes which show that use of these special and sensitive products

neuters an agricultural outcome from the Doha Development Agenda (DDA). Nigeria gains

some $198 million, with a loss of $59 million from agricultural reform and gains of $257

million from non-agricultural reforms. By sector, the gainers in Nigeria are heavily

concentrated in the oil and gas industry.

The Nigerian–EU trading relationship

This paper then uses the GTAP computer model to assess what the likely benefits from a full

FTA between Nigeria and the EU are likely to be. The results suggest that there will be gains

to Nigeria of some $856 million at 2015. These gains come about exclusively through its

own reduction in import tariffs to zero on EU27 imports, and this increased welfare stems

mostly from an increased investment/capital stock as global manufacturing exports increase

as the sector becomes more internationally competitive. This is a significant result for

Nigeria. The EU gains a larger $1,119 million, with almost all of this from preferential access

into Nigeria. Other trading partners lose in welfare terms, and we caution that the GTAP

model has not increased any other domestic taxes neutralising the reduced income the

Nigerian government faces due to tariff reductions.

In the standard GTAP model the total labour supply is fixed exogenously, and the model

assumes that there is full employment in all countries/regions of the world. This is a very

simple assumption and is clearly not the case in Africa in general with high unemployment

rates. Therefore we have extended the standard model so that the total unskilled labour

supply is modelled using a labour supply curve which specifies the relation between labour

supply (unemployment rate) and the real wage in each region. The results show that if

Nigeria is serious about lowering unemployment, the policy option of holding wages in

nominal terms and increasing the numbers in the workforce is a superior one.

Section 2 – Introduction

Nigeria, with its population of close to 150 million, is the 9th largest country in the world by

population and certainly the largest in Africa. It is, however, a low income country according

to the World Bank definition, with a 2005 Gross National Income (GNI) as measured in

purchasing power parity (PPP) of just $560 per annum. The WTO2 reports that during 2005

it was ranked 29th as a global merchandise exporter and 42nd as a global importer when

2 World Trade Organisation, www.wto.org.

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intra-EU trade is ignored, and holds a place some ten positions lower in global services trade.

Since merchandise exports are much higher than imports ($42,277 million versus

$17,702 million during 2005) its trade balance is strongly positive. In 2006, its current

account balance as a percentage of GDP was 12.2%, growth of real GDP 5.3%, inflation rate

8.3% while export to GDP ratio stood at 45.6%. Fuels and mining products dominate these

exports (90.4%), and manufactures (75.6%) its imports. By destination the US (49.9%) and

the EU (23.1%) dominated during 2006, while the main sources of imports were the EU

(32.8%), China (10.7%) and the US (8.4%). Intra-African trade is low, with South Africa

being its major import source in Africa (2.2% of its total imports) and Côte d’Ivoire being its

major export destination in Africa (2.8% of its total exports).

By WTO standards its applied tariffs are relatively high, with a reported Most Favoured

Nation (MFN) applied average rate of 15.6% on agricultural imports and 11.4% on non-

agricultural imports during 2006. Some 19.2% of Nigeria's total tariff lines are bound,

generally at ceiling rates. All tariff lines on agricultural products are bound, in contrast with

only 7% of non-agricultural lines (WTO definitions). Final bound tariffs range from a minimum

of 40% to a maximum of 150%, with an average of 118.4%. Conversely, for its exports

Nigeria is eligible for non-reciprocal trade preferences under the Generalised System of

Preferences (GSP) schemes of several WTO Members, the Cotonou Agreement with the

European Communities (EC), and the US African Growth and Opportunity Act (AGOA).

Utilisation of these opportunities with non-oil exports remains low, as oil completely

dominates exports from Nigeria. Indeed, during 2005 Nigerian exports were concentrated to

the extent that 97.5% were in HS Chapter 27, oil and gas exports.

In addition to these, Nigeria 3 uses import prohibition to protect its manufacturing and

agricultural sectors. Its import prohibition list includes a wide range of manufactured (all of

Chapters 50-63 for example) and a few agricultural products (including fresh fruits, pork and

pork products, beef and beef products, mutton, lamb and goat meat, and frozen poultry). On

its export prohibition list are maize, timber, raw hides and skin, scrap metals, unprocessed

rubber latex and rubber lumps, artefacts and antiquities, and wildlife animals classified as

endangered species and their products. Despite this protection, Nigeria’s export is still

dominated by oil and gas products, while some of the prohibited import products get

smuggled in through its porous borders with Benin Republic.

3 Nigeria Customs Service, www.nigeriacustome.gov.ng/Prohibitions%20List.htm.

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Politically, tralac 4 reports that the oil-rich Nigerian economy, long hobbled by political

instability, corruption, and poor macroeconomic management, is undergoing substantial

economic reform under the new civilian administration. Nigeria's former military rulers failed

to diversify the economy away from over-dependence on the capital-intensive oil sector. The

current civilian government through its medium-term economic strategy – the National

Economic Empowerment and Development Strategy (NEEDS) – aims at stimulating

economic growth via trade by laying a solid foundation to fully exploit Nigeria’s potentialities

in international trade (Briggs, 2007). However, the WTO reports that the mining sector,

specifically the petroleum subsector, dominates the Nigerian economy. It accounts for some

45% of GDP, 95% of export earnings, and over 70% of total government revenue, but

employs only 5% of the labour force. The largely subsistence agricultural sector has failed to

keep up with rapid population growth, and Nigeria, once a large net exporter of food, now

must import food.

Nigeria's trade policy has been found to be somewhat inconsistent from the period after

independence (Adenikinju, 2005) but NEEDS seeks to drastically reduce the age-long

unpredictability of the trade policy regime, establish a schedule to fully adopt the Economic

Community of West African States (ECOWAS) common external tariff (CET) by 1 January

2008, and respect obligations under multilateral trading systems.

Objectives of the study

It is against this trading background and trade policy regime that the paper will examine the

implications for Nigeria from firstly an outcome for the WTO DDA and secondly for

extending the proposed Economic Partnership Agreements (EPA) for the continuation of the

Cotonou Agreement past its scheduled WTO-mandated end at 2008 to a full goods-only free

trade agreement between Nigeria and the EU. To undertake this analysis we will use the

GTAP model. Before describing the model and subsequently undertaking the analysis the

paper will provide a background to the WTO DDA and outline the possible parameters of an

outcome as the situation stands at mid-2007.

4 Trade Law Centre for Southern Africa, www.tralac.org.

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Section 3 – a Doha Development Round Simulation The WTO

The WTO deals with global rules of trade – it determines and oversees the multilateral trade

rules among the 151 members. The main function is to ensure that international trade flows

as smoothly, freely and predictably as possible and with no undesirable side-effects. It aims

to raise standards of living and ensure full employment in member states by enabling the

expansion of trade in goods and services in a sustainable manner. The current DDA aims to

continue this momentum and further open global trade across a broad front, and theoretically

the second ‘D’ in DDA for ‘Development’ is to ensure that developing and, more importantly,

less developed countries, are given a boost up the global ladder.

But within this (and on the road to this) potentially fairer and more market-oriented trading

system there is no symmetry of negotiating power and opportunity between the parties, as

over three-quarters of WTO Members are developing or least-developed countries with many

of the latter situated in Africa. Developing countries are themselves not a homogeneous

group, but agriculture plays an important role in most of their economies – whether through

exporting, rural development and/or food security. Some are already food exporters, and

others could develop export-oriented agricultural sectors, but first need better export

opportunities. WTO Members have recognised that liberalisation in these developing

countries’ own markets needs to be more gradual than for developed countries – the

principle of ‘special and differential treatment’ (S&D), while least developed countries are

required to make very few adjustments. The latter comment is, however, tempered by the

extent to which these least developed countries are an integral part of a common external

tariff (CET) arrangement involving other developing or even least-developed countries, as in

these cases some will be unable to take full advantage of the S&D provisions. Such is the

case within ECOWAS. Finally, it is important to always keep in mind that the WTO

negotiates ‘bound’ tariffs, or tariff rates that members have pledged not to exceed, rather

than ‘applied’ or what is actually levied at the border. In agriculture in particular, these

bounds are often above and sometimes considerably above applied rates, thus a reduction in

bounds may make little or even no difference in practice at the border. For Nigeria, a so-

called Paragraph 6 country5, the latter situation is complicated in that many of the tariffs in

non-agricultural products are not formally bound.

5 The Paragraph 6 countries’, defined in Paragraph 6 of the NAMA (Non-Agricultural Market Access) annex of the WTO's August 2004 Framework Agreement, are WTO members that have bound 35% or less of their NAMA tariff lines. This Framework exempts countries with a binding coverage of non-

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The importance of agriculture

Agricultural protection and domestic support in developed countries has led to three main

effects. The first two effects are (a) lower global prices of some agricultural products as a

result of these policies, which, in turn, (b) increased the competitiveness of developed

countries’ agricultural products on international markets, thus reducing the export levels of

some African countries exporting the same products (cotton and sugar). However, importers

of other agricultural products such as cereals benefited from import prices that are often

lower than the real costs. The third effect is (c) the high tariff (and non-tariff) protection that is

applied in most developed countries as part of their agricultural policies, and these restricted

agricultural products that could be exported by African countries6. These issues are all linked

and complex. It is easy to point to examples where African nations benefit from global

agricultural protection. The opportunity to gain from preferential access into some markets

and the abilities to gain from depressed commodity prices to the extent that countries are net

food importers are two such examples. But these are second-best arguments, and one must

not lose sight of the first-best ‘big picture’ and provided that care is taken to ensure a

carefully constructed negotiating strategy is followed, the net effects for Africa should be

positive.

Issues for the agricultural negotiations

It is becoming apparent that there are many trade-offs for developing and least-developed

countries in the increasingly complex web of global agricultural policies. Perhaps nowhere

are these dynamics as embodied as they are in the complexities of Special Products (SP)

and Special Safeguard Measures (SSM) for the developing and even least-developed

members on the one hand and the potential use of Sensitive Products by the developed

countries on the other. For the latter, there is the danger that developed countries may

declare all products of access interest to the developing world as sensitive, thus neutering

the DDA for them, while on the other, there is an urgent need for developing countries to

seriously consider exactly what products they want to protect, justify these to at least their

agricultural tariff lines of less than [35]% from making tariff reductions through the formula. They are expected to bind [70-100]% of non-agricultural tariff lines at an average level not exceeding the overall average of bound tariffs for all developing countries. There are 12 countries listed as Paragraph 6’ countries (with their percentage of tariffs that are bound shown in brackets): Cameroon (0.1%); Congo (3.2%); Côte d'Ivoire (22.9%); Cuba (20.4%); Ghana (1.2%); Kenya (1.6%); Macao (China) (15.6%); Mauritius (5.3%); Nigeria (6.9%); Sri Lanka (28.3%); Suriname (15.1%) and Zimbabwe (9%). 6 This has been the impact of EU export subsidies, although with current (October 2007) world agricultural prices these impacts have lessened.

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domestic constituencies, and examine how they are going to design and implement a regime

to operate the SSM.

The three main pillars for agricultural negotiations are market access, domestic supports and

export subsidies. For market access the US has proposed a series of deeper cuts in tariffs

based on four tiers for both developed and developing countries. There will be only

one percent of tariff lines as ‘sensitive products’, and there must be compensatory Tariff-Rate

Quota (TRQ)7 expansion for these products. The developing countries will operate under the

same four tiers, but with tariff cuts to be negotiated. They will have longer periods and lesser

cuts, and the SSM and SP to provide transitional protection from import surges, but they

should make some meaningful commitments. The EU has also proposed a four-tier approach

to tariff cuts that appear to be less steep than the US proposal. Importantly, the EU wants to

preserve roughly eight percent of tariff lines as sensitive products that are protected by lower

tariff cuts within an expanded TRQ access and with recourse to the special safeguard

clauses. The G108 has reaffirmed the principle of S&D and continued their support for

sensitive product concession in market access and for tariff cuts proposes a position similar

to the US. The G209 proposal also adopts a similar band structure to the US proposal, but

proposes linear cuts within these bands for both developed and developing countries, with

the developed cuts at least 54% on average nearly twice the maximum cut of 36% on

average mandated for developing countries.

For domestic supports there is a major debate evolving around reductions here, with much

of the debate focusing on the EU’s blue box and the need to ensure that ‘box shifting’ of

supports does not take place. Reductions should increase global prices for many agricultural

products, and although this is generally good for exporters, it may have implications for

import prices and thereby for consumers.

While in general export subsidies are of limited concern to developing and least developed

countries, there are some complex inter-plays involved. These include the need to ensure

that delivery of genuine food aid is not hampered in an emergency, that such food aid does

7 The TRQ is a two-levelled tariff where the tariff rate charged depends on the volume of imports. A lower (in-quota) tariff is charged on imports within the quota volume. A higher (over-quota) tariff is charged on imports in excess of the quota volume. 8 A WTO informal grouping comprising net food-importing, mainly developed countries that include Japan, Korea, Norway and Switzerland. 9 Another recently formed informal grouping of Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, South Africa, Tanzania, Thailand, Uruguay, Venezuela and Zimbabwe. These are generally but not necessarily food exporters that have provided an alternative view to the larger and richer OECD economies within the WTO.

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not destroy domestic commercial supplies, and that the monetisation of food aid shall be

phased out. The balance is between ensuring that food aid is delivered when and where it is

needed, and possible circumvention of export subsidies by the developed countries using

surplus food as food aid in a way that is prejudicial to the objectives of curtailing export

subsidies.

Other issues and the implications include the Special Products and even perhaps Sensitive

Products. The latter are products that a member may declare and thus be obliged to make

lesser market access commitments for that product. Special products extend this concept to

developing members only for those products that are a staple or basic food of that country,

and negotiations continue on how extensive this concession may be. Extending this still

further is the special safeguards measure (SSM) that will allow both developing and least-

developed members to raise tariffs in the event of an import surge that threatens domestic

producers: it constitutes a unique instrument to assist with food security, livelihood security

and rural development.

The literature review

Who stole the gains from Trade Liberalisation to Africa?

This section examines the literature on the gains from trade liberalisation to Africa from both

(1) the DDA and (2) proposed agreements between African countries and the EU. Analysts

are warning that the projected gains from the DDA are not what they were initially expected

(hoped?) to be as an updated model database enables factors such as tariff revenue loss to

be factored into recent research and the hopes of anything approaching a comprehensive

DDA agreement are fading. With respect to the proposed EPA between the ACP countries

the same tariff revenue loss and the related concept of trade creation/trade diversion is

important, but more crucially the perceived potential damage to Africa’s industrial base, the

reluctance of the EU to make meaningful reforms to their agricultural sector during the DDA

negotiations and the limitations to take advantage of opportunities imposed by self-inflicted

African infrastructural constraints are casting a shadow that suggests there may even be

losses to at least some African countries from both the EPA and the DDA10.

10 We note that other authors have argued that developing countries in Africa in particular need to expand their South-South trade (trade between developing countries) in order to improve their own industrial bases, and that unilateral liberalisation will foster the competitiveness needed to enhance this trade. For example, Rodrik (2006) outlines how China achieved its spectacular growth rates over recent years by exporting a basket of goods that is significantly more sophisticated than what would normally have been expected from a country at a similar stage of development.

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Key policy points emerging

Virtually all of the recent modelling work is pointing to reduced gains from the DDA, and even

in some cases for developing countries, to losses.

This from a combination of better models that have more recent information such as the final

UR tariffs and the full implications of China’s accession to the WTO incorporated and an

ability to model tariff revenue losses and the impacts of trade creation/diversion effects, the

consequences of the erosion of tariff preferences, and a ‘scaling down’ of the DDA ambitions

that are now being modelled as more realistic assumptions of any outcome.

These same or similar factors are also contributing to the cautious results that are now

coming from researchers who are looking at the EPA possibilities.

These results are accentuated by the problems facing Africa in its major infrastructural and

capacity constraints that will severely limit the abilities of most African countries to take

advantage of the new opportunities. Africa itself must address most of these problems, and,

in doing so, ensure that aid monies for these projects are well spent.

However, it is not entirely clear as to where new trade opportunities may come from, as most

African countries have good access into Europe under CONOTOU for most- or the EBA for

the least-developed countries.

The reviews

A good place to review the so-called ‘disappearing gains from trade liberalisation’ is the

paper by Ackerman (2005) that details how the gains are becoming both smaller and skewed

towards the developed countries rather than poverty alleviation in the developing world. In

other works widely cited at Hong Kong, the World Bank are revising their benefits downwards

to a miserly $3.13 per head in the developing world (in contrast to the $79.04 per head in the

developed world)11.

Why are the gains shrinking? Part of this is that some of the assumptions are being re-

visited (employment, for example), while the newer version of the GTAP database enables

analysts to use better trade and tariff data and incorporate both the EU expansion and

11 Anderson and Martin (2005) and Hertel and Winters (2005).

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China’s WTO accession into their now-updated base work. Some of the more optimistic

models employ dynamic and economies of scale assumptions that extend the scope and

range of these gains, and these assumptions are rightly viewed with some scepticism.

Added to this is the realisation that “free trade” is an overly optimistic and somewhat

mercurial concept and therefore modellers may be better served by assuming a more

realistic outcome to assist policy makers. This is realism versus idealism in essence.

Other research that warns of the trade creation/diversion costs of the EPA and potential tariff

revenues loss is the review by Szepesi and Bilal (2003). They consider that potentially trade

creation does outweigh diversion, but there is a considerable diversion effect, and that

revenue losses are likely to represent over 50% of import revenues in some countries

(Francois et al, and Baunsgaard and Keen, 2004). The World Bank (Hinkle and Schiff, 2004)

also finds that EPAs offer considerable potential benefits to Sub-Sahara African (SSA)

countries, but they also pose a number of policy, administrative, and institutional challenges,

including replacing forgone tariff revenues, avoiding serious trade diversion, appropriately

regulating liberalised service industries, and liberalising internal trade.

Polaski (2006) found that agricultural liberalisation benefits only a relatively small subset of

developing countries. Global gains range from an insignificant $2.9 billion with a limited

agricultural liberalisation at one extreme and $5.4 billion under the current DDA agriculture-

only liberalisation through to a maximum of $168 billion for comprehensive liberalisation at

the other extreme. Those benefiting from agricultural liberalisation include Brazil, Argentina,

most of Latin America, South Africa, and some Association of Southeast Asian Nations

(ASEAN) member countries, notably Thailand. Accounting for this is the ’Special Products’

(SP) scenario, where this was an ’outer bound’ of any agreement that might be reached in

which least-developed countries are to shelter all their agricultural products from

liberalisation as SPs.

Kirkpatrick et al (2006) concur, and agree that the economic impact of the DDA is likely to be

modest and smaller than earlier predicted. In particular they are worried that the gains are

not shared, and in the poorer countries, with Sub-Saharan Africa as the example, poverty

may worsen as these countries lose from trade liberalisation on the one hand and, on the

other, face severe supply constraints that bedevil Africa. This is especially so when the

dynamic or second and subsequent effects of the DDA are examined, as the developing

countries have the best infrastructure to exploit these advantages. If the DDA is to be a

‘development round’, then additional measures such as ‘aid for trade’ (specific trade-related

capacity-building measures) will need to be implemented.

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Perez and Karinga (2006) use the GTAP model to produce very gloomy results for Africa,

with a welfare loss of some $0.6 billion and fiscal losses from tariff revenues from a

comprehensive EPA. Even worse, the intra-African trade diversion is of the order of 18%,

highlighting that the EU is destroying the very thing it wants to promote: African integration,

although agriculture does gain slightly. Taking the analysis further, and mindful of the fact

that all African candidates for the EPAs are aggregated together, the authors find that only a

large asymmetry between what Africa and the EU give in the way of tariff elimination will

result in a somewhat neutral outcome for Africa, but even here there are pitfalls for Africa in

that the results are destabilising upon manufacturing and intra-African trade in particular. In

short, they cannot see an up-side for Africa. This is supported by Fang et al. (2006), who

use a CGE model to assess the impact of trade liberalisation on food security in Sub-

Saharan Africa and South Asia.

In a similar review Kwa (2006) comes to similar conclusions citing many of these same main-

stream references above. It is against this somewhat sobering background that the paper

will examine the implications for Nigeria of firstly an outcome in the DDA and secondly

moving beyond an EPA agreement to a full goods-only FTA between Nigeria and the EU.

Section 4 – The GTAP analysis Introduction Model, database and scenarios The objective of this section is to discuss the model and database used in this analysis and

how these predict the overall welfare benefits to the respective parties12.

The database is the most recent Version 6 GTAP database with the base year 2001

(Dimaranan et al., 2005), where the 2001 tariff data originating from the Market Access Maps

(MacMap) database has been used with some verification and minor modifications. The main

unskilled labour market closure of the model has been changed so that the supply of

unskilled labour is endogenously determined by the labour supply elasticity. We believe this

is more relevant to a labour-surplus economy.

12 The potential gains to FTAs between South Africa and its leading trade partners have also been assessed by tralac (Sandrey et al. 2007) using the same GTAP database and model as used in this paper.

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Like any applied economic model, this model is, of course, based on assumptions, both in

terms of theoretical structure as well as the specific parameters and data used. Regional

production is generated by a constant return to scale technology in a perfectly competitive

environment, and the private demand system is represented by a non-homothetic demand

system (a Constant Difference Elasticity function) 13 . The foreign trade structure is

characterised by the Armington assumption implying imperfect substitutability between

domestic and foreign goods.

The macroeconomic closure is a neoclassical closure where investments are endogenous

and adjust to accommodate any changes in savings. This approach is adopted at the global

level, and investments are then allocated across regions so that all expected regional rates

of return change by the same percentage. Although global investments and savings must be

equal, this does not apply at the regional level, where the trade balance is endogenously

determined as the difference between regional savings and regional investments. This is

valid as the regional savings enter the regional utility function. The quantity of endowments

(land, skilled labour and natural resources) in each region is fixed exogenously within the

model, although, as discussed, alternative unskilled labour market assumptions are

investigated. The capital closure adopted in the model is based on the theory where changes

in investment levels in each country/region become on-line instantly, updating the capital

stocks endogenously in the model simulation14. Finally, the numeraire used in the model is a

price index of the global primary factor index.

The global database combines detailed bilateral trade, transport and protection data

characterising economic linkages among regions, together with individual country input-

output databases which account for intersectoral linkages within regions. The database

contains 96 regions and 57 sectors, and we have aggregated these to 10 regions and 41

sectors in order to keep the model within computational limits and focus on the individual

member countries/regions of the FTA. These 10 regions are Nigeria and the EU27 and

another eight-country/region grouping of the US, Japan, China, India, Brazil, South Africa,

Rest of Africa and the Rest of the World.

The applied ad valorem equivalents (AVEs) tariff data found in the standard GTAP Version 6

databases originate from the Market Access Maps (MacMap) database, which is compiled

13 Hence the present analysis abstracts from features such as imperfect competition and increasing return to scale, which may be important in certain sectors. We are therefore using what can be thought of as a base GTAP structure. 14 This capital closure adopted in the model is the so-called Baldwin closure as documented in GTAP technical paper no. 7.

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from UNCTAD TRAINS data, country notifications to the WTO, AMAD, and from national

customs information. The MacMap database contains bound, Most Favoured Nation (MFN)

and bilateral applied tariff rates (both specific and ad valorem) at the 6-digit Harmonised

Systems (HS6) level. These are then aggregated to GTAP concordance using trade weights

compiled from the COMTRADE database.

Baseline projection 2001 – 2015

A meaningful evaluation of an anticipated policy change can be obtained by comparing the

liberalisation scenario with a non-liberalisation (business as usual) base scenario. This base

must contain projections of the macroeconomy and incorporate the effects of important policy

changes other than specific policy changes to be analysed. Our business-as-usual baseline

features a number of important policy initiatives by the EU and others that must be set in

place first. These are (as shown in Box 1):

• a stylised implementation of the Agenda 2000 and the Mid-Term Review Reform of the

CAP;

• the accession of China to the WTO;

• the final implementation of the UR commitments for developing countries;

• the enlargement of the EU with 12 new member countries;

• the Everything But Arms (EBA) Agreement between LDCs and the EU;

• the implementation (and continuation) of the AGOA on textiles and wearing apparel;

• an update of India’s applied MFN tariff rates to the latest year available.

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Box 1. Assumptions shaping the baseline 2001 –2015

Projections Shocks to GDP, factor endowments and population

Total factor productivity endogenously determined

Trade Policy changes Abolishment of export quotas on textiles and apparel shipped to the EU and the US

Final implementation of the UR commitments for developing countries

Accession of China to the WTO

Enlargement of the EU customs union and the extension of the EFTA to include the new member

countries

EBA agreement between LDCs and the EU

AGOA on textiles and apparel

EU Agenda 2000 and Mid-Term Review (MTR) Reform All direct payments deflated by 2 percent per year (maximum budgetary outlays fixed in nominal

terms)

Adjusted hectare and livestock premiums (direct payments)

Decoupling of direct payments to a single farm payment

Milk quotas unchanged

Reductions in intervention prices modeled by reducing export subsidies and import tariff rates.

US agricultural subsidies Agricultural expenditure fixed in nominal terms at its 2001 level

As always, we apply shocks to GDP, population, labour force, and capital to project the world

economy to the baseline year of 2015 – a year when the market access reforms are

assumed to be completed. The projection of the world economy uses the exogenous

assumptions listed in Table 1, and is important in shaping the baseline scenario. The general

sources for these assumptions in Table 1 are given as a footnote to the table, and they

represent the best estimates of the possible future path of the data. The GTAP model then

determines changes in output through both an expansionary and a substitution effect in each

country/region of the model. This expansionary effect represents the effects of growth in

domestic and foreign demand shaped by income and population growth and the assumed

income elasticities, while the substitution effect reflects the changes in competitiveness in

each country/region shaped by changes in relative total factor productivity, cost of production,

as well as any policy changes. Thus, the GTAP model uses this set of macroeconomic

projections to generate the ‘best estimate’ of the global production and trade data as it will be

15


in 2015. Therefore, the relative growth rates between each country/region for GDP,

population, labour, capital and total factor productivity play an import role in determining the

relative growth in output of the commodities when projecting the world economy from 2001 to

2015, and we can now take the resulting data set from this baseline simulation as the new

base for our FTA scenario. A simulation scenario measures the difference between our

baseline model’s output at 2015 in the absence of the selected FTA against what it would be

with the FTA introduced. Therefore the model results shown in this paper present the

isolated effect of the FTA outcome.

Table 1: Macroeconomic projections, annual growth rates, 2001 – 2015

Labour Force

Real GDP Pop. Total Unskilled Skilled Capital TFP*

Nigeria 3.1 1.9 2.9 2.8 3.5 3.1 0.4

South Africa 3.2 0.4 1.3 1.2 1.9 3.2 0.5

India 5.8 1.3 1.8 1.6 4.7 5.8 1.2

Brazil 3.3 1.1 0.9 0.6 3.5 3.3 0.5

Rest of Africa 4.0 2.0 2.6 2.5 3.6 4.0 0.4

China 7.2 0.6 0.9 0.8 3.9 7.2 1.3

Japan 1.8 -0.1 -0.2 0.2 -0.7 1.8 0.6

EU 2.2 0.0 0.2 0.2 0.2 2.2 0.5

US 3.2 0.8 1.2 1.4 1.0 3.2 0.7

Rest of World 3.7 1.2 1.8 1.6 3.7 3.7 0.4

Sources: World Bank forecasts, Walmsley (2006) and own assumptions. Note: *The annual growth rate in Total Factor Productivity is determined by the exogenous variables (GDP, unskilled, skilled labour force and capital), the model and the associated database.

DDA assumptions

The primary scenario considered in this paper entails the result from a possible Doha round,

with the results as measured in the year 2015 in a world shaped by the baseline scenario.

Differences between the so-called initial baseline scenario and this so-called primary Doha

scenario are therefore the results of implementation of Doha. Note that we are not modelling

reductions in either services or any non-tariff barriers.

In the agricultural case, we use the tiered market access formula suggested by the G20

(Table 2 below) allowing developed countries take out two percent of their tariff lines as

sensitive products while developing countries are allowed to exclude three percent of their

16


tariff lines. All agricultural export subsidies found in the GTAP database are eliminated, while

there is no change to domestic support in our Doha scenario. We have omitted any

reductions in domestic supports from the model as analysts are finding that this makes little

difference to the results, and in practice they are very hard to model15. And we note that the

introduction of the 2% and 3% allowed for Sensitive Products is likely to make a big

difference, as the real targets are removed from the shooting gallery16.

Table 2: G-20 proposal for market access

Tariff rate (%) Tariff cut (%) Tariff rate (%) Tariff cut (%)

Developed countries Developing countries

Greater than 75 75 Greater than 130 40

Between 50.01 and 75 65 Between 80.01 and 130 35

Between 20.01 and 50 55 Between 30.01 and 80 30

From 0 to 20 45 From 0 to 30 25

Cap: 100% Cap: 150%

With regard to the NAMA (Non Agricultural Market Access) reform we use the simple Swiss

formula with coefficients 5 and 20 for respectively developed and developing countries,

including newly acceded members. Developing countries and newly acceded countries are

allowed to exclude up to 5% of their tariff lines if it does not exceed five percent of their value

of imports. Non-bound tariff are bound by adding 20 percentage points (mark up) to the MFN

rate. The so-called Paragraph 6 countries (Nigeria) and small vulnerable countries are not

required to make any reductions in their applied tariffs but have to bind all their tariffs so that

the simple average of all NAMA tariff lines do not exceed respectively 28.5 and 22 percent

on average. LDCs are not required to do anything by way of reform themselves, but are likely

to gain duty-free access into developed countries markets for both agricultural and non-

agricultural products.17

15 We note that the EU has made domestic reforms under the MTR reforms of the CAP that may enable it to escape future restrictions imposed by a possible DDA outcome, and that current high agricultural prices on the global market are also lessening the global impacts of these domestic supports in the EU and US. 16 The latest revised draft modalities for agriculture (WTO August 2007) also propose the G20 tiered formula but with a range within which the tariff cut percent should lie for each band. Over chosen tariff cut percents lie for the most within this range. We note that we have not modelled the proposed exceptions for small vulnerable economies or the proposed maximum average reductions in bound duties for developing countries. Also our 2% and 3% allowance for Sensitive Products is well below the range suggested by the revised draft and we have not modelled any tariff quota expansion. 17 Most LDCs already effectively have this quota- and duty-free access into the EU under the Everything But Arms (EBA) agreement (except for rice and sugar), and most African countries have similar preferential access into the US under AGOA.

17


The scenario is detailed below:

• Least developed countries or LDCs: LDCs are exempt from making any commitments.

• Paragraph 6 countries (including Nigeria): Countries with less than 35% binding

coverage are exempt from making tariff reductions through the Swiss formula. They

are, however, expected to bind 95% of non-agricultural tariff lines at an average level

that does not exceed the overall average of bound tariffs for all developing countries

after full implementation of current concessions. This level is calculated as 28.5%.

• Small vulnerable economies: These countries are exempt from making tariff reductions

through the Swiss formula, although they must bind 95% of non-agricultural tariff lines at

an average level that does not exceed 22%.

• Newly acceded members and developing countries: These implement the Swiss

formula with a coefficient value of 20. They do, however, have the flexibility of retaining

unbound tariffs or formula cut exemptions for up to 5% of all lines, as long as the lines

do not exceed 5% of the member’s total import value.

• Developed countries: These countries implement the Swiss formula with a coefficient of

5 and they must grant duty-free and quota-free market access for non-agricultural

products originating from LDCs.

The general instrument for specifying tariff reduction commitments is the so-called simple

Swiss formula, defined as:

0

01 b)or (a

b)or (a tt

t+×

=

where,

t1 = Final bound tariff

t0 = Base rate

a = Coefficient for developed Members (= 5)

b = Coefficient for developing Members subject to the formula (= 20)

18


The base rate is given as the current bound rate or, in the case of unbound tariff lines, the

MFN rate plus a constant mark-up of 20 percentage points. The Swiss formula is constructed

in such a way that the highest tariffs are reduced the most, thus eliminating tariff peaks. Also,

the final bound tariffs will be no higher than the coefficient used in the formula, i.e. 20% for

developing and 5% for developed countries18.

Section 5 – The results: a plausible Doha Round outcome The big picture

Table 3 shows the changes in welfare19 from a possible Doha outcome, with the data

expressed in US$ million as one-off increases in annual welfare at the assessed end point of

2015. The welfare results are given as a total value, and then this total is split between

contributions from agriculture (which is itself split between agricultural export subsidy

abolition and market access changes) and NAMA reforms. The overall gains of $48 billion

are dominated by NAMA gains of $45 billion, thus reinforcing the ‘modern’ GTAP results

which show that use of the special and sensitive products neuters an agricultural outcome

from the DDA. Note that (a) global welfare changes from the abolition of export subsidies

are almost zero (a gain of $7m), and (b) that we have not modelled any changes to domestic

supports.

Table 3: Welfare (EV) results from Doha outcome, US$m Total Agr Export Agr market NAMA

EV US$m Subsidies access

NGA 198 -61 2 257

ZAF 223 17 20 186

RAF 983 -295 341 937

18 In the latest ‘Chairman’s Introduction to the Draft NAMA Modalities’ (WTO July 2007) the formula proposed by the chairman to reduce bound tariffs is the Swiss formula where he suggests a coefficient for developed countries in the range of [8-9] and developing [19-23] with a mark-up of 20 percentage points to the MFN applied rate for unbound tariffs. We note that our modelled NAMA tariff reduction is not far of the mark from the chairman’s negotiation proposal. 19The interpretation of results from a model is not straightforward. In the standard type of computer general equilibrium (CGE) such as the GTAP model these results are expressed as welfare measures that show how much better off a country/region and the world are as a result of the particular change. There is no indication of the time-path of the welfare gains in a static model, so a welfare gain of $10 million to Nigeria means that Nigeria is $10 million better off at the final year than it otherwise would have been in the absence of that change. There is also little said about the distributional aspects of these gains as there is only one ‘representative household’ in GTAP.

19


Total Agr Export Agr market NAMA

EV US$m Subsidies access

EU 5,907 1,040 591 4,275

USA -1,189 387 548 -2,124

IND 1,534 -3 68 1,469

CHN 8,968 -67 -9 9,044

BRA 2,611 89 617 1,905

JAP 5,404 -13 224 5,193

ROW 23,532 -1,086 787 23,831

Total 48,180 7 3,265 44,907

Source: GTAP results

Nigeria’s gains are $198 million: a loss of $61million from abolition of export subsidies20,

$2 million from better market access for agricultural goods, and the bulk ($257 million) from

the NAMA outcome. The biggest loser in dollar terms is the US, with all other

countries/regions gaining. China and the rest of the world (ROW) are the biggest gainers,

with all of these gains coming from NAMA.

Table 4 shows the composition of these welfare gains. Globally they are spread between

gains in allocative efficiency and an expansion of the capital stock that in turn is increasing

production. For Nigeria there are some gains in these two components of the overall gains

but the majority comes from terms of trade gains as the relative prices of Nigeria’s exports

increase by more than those of imports. Not shown is that under the employment closure

that we are using Nigeria’s employment rate increases by 0.036% and wages for those in

employment increase by a greater 0.107%. While not massive, these gains are

incrementally important.

Table 4: Composition of the welfare gains from Doha, US$million Total Allocative Unskilled Capital Terms of

EV efficiency Labour stock trade

Nigeria 198 18 2 36 143

Global total 48,180 20,430 225 27,539 -14


20 This occurs because global agricultural export prices increase as a result, and as Nigeria is an agricultural importer this has a negative impact.

20


The individual components of the contributions to factor income are shown in Table 5, where

the contribution from natural resources (right-hand column) is clearly shown. Overall real

GDP increases by 0.09% in Nigeria as a result of the Doha outcome.

Table 5: Factor income contributions – relative % changes Total Contributions from

Real Factor Unskilled Skilled Natural

TOT GDP Income Land labour labour Capital resources

Nigeria 0.46 0.09 0.45 0.01 0.02 0.01 0.07 0.34

Source: GTAP result

Extending Table 5 to show the agricultural factor income (Table 6) highlights that this

agricultural contribution is relatively minor as the contribution here is less than one-quarter of

the total.

Table 6: Agricultural factor income Primary

Agricultural Contributions from

Factor Unskilled Skilled

Income Land labour labour Capital

Nigeria 0.12 0.05 0.07 0.00 0.00

Source: GTAP result

The changes by GTAP sector

Table 7 shows the relative changes in the key Nigerian GTAP sectors as a result of this

Doha outcome. These changes are driven almost exclusively by the natural resources sector

of oil, coal and gas. Here output increases by 0.08% (driven by global price increases of

0.62%). Leather goods are the only other productive sector to show any significant changes,

and here output declines by 7.33% as exports decline. Output in the service sector increases

by 0.17% even though we are not modelling changes specifically in this sector.

21


Table 7: Changes in Nigerian production and trade (%) from base post-Doha Change Contributions from Change in Quant %

Output % Ex Sub Agr access NAMA exports imports

Resources

Coal/oil/gas 0.08 0.00 0.00 0.08 0.08 0.04

Manufacturing

Leather -7.33 -0.05 -0.47 -6.81 -11.05 -0.05

Services 0.17 -0.05 -0.02 0.25 0.49 0.49


The changes made to Nigeria’s import tariffs on products originating from the markets of the

Rest of Africa, EU, US and Rest of the World are shown in Annex Table A1, while the

comparable changes made to tariffs faced by Nigerian exporters are shown in Annex table

A2. Note that tariff changes for oil exports are minor, suggesting that the price increases are

coming through enhanced global economic activity. While there are several tariff reductions

in many products in Nigerian markets these have little or no impacts on production and trade

as exports are very minor in these sectors. Also note that (a) similarly there are some

changes in Nigerian import tariffs in agriculture but that these are off large base tariffs, and (b)

there are no changes in Nigerian import tariffs in either natural resources or manufacturing

as Nigeria is exempt from making any reductions in non-agricultural goods.

Tables 8 and 9 take the next step and expand upon the changes to relative tariffs and prices

to show the specific details of the changes to firstly export destinations (in Table 8) and then

import sources (in Table 9). In resources are some major changes in the exports (Table 8) of

coal, oil and gas, with a big increases to both the EU and US – but some of this is trade

diversion away from the rest of Africa. In manufacturing trade, changes are limited to a

relatively minor $17.7 million decline.

Table 8: Changes in Nigerian exports, $ million

Rest of Africa EU US Brazil

Rest of World Total

Other crops 0.2 -1.8 -0.1 0.0 -1.9 -3.3

Coal oil gas -69.2 53.5 103.2 24.2 11.9 179.7

Leather goods -0.3 -12.0 -0.9 -0.5 -0.1 -13.7

Subtotals

Services -0.4 -4.6 -1.2 0.0 -0.4 -6.4

Agriculture 0.2 -3.6 -0.1 0.0 -1.2 -4.0

22


Rest of Africa EU US Brazil

Rest of World Total

Natural resources -69.2 53.5 103.2 24.2 11.9 178.9

Manufacturing -4.5 -15.1 -1.1 -0.3 1.2 -17.7

Total -74.0 30.2 100.8 24.0 11.5 150.7

Source: GTAP results.

Changes in imports as shown in Table 9 highlight that these are very minor, with only the

dairy products (with a import substitution away from the EU towards the rest of the world),

petroleum products as the sector readjusts marginally to enhanced crude oil exports, and the

catch-all ‘other manufacturing’ products show noteworthy changes.

Table 9: Changes in Nigerian imports, $ million

Rest of Africa EU US India China

Rest of World Total

Other crops 0.0 0.3 -0.3 0.0 0.0 0.0 0.0

Coal oil gas 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Milk products 1.7 -53.0 -0.1 0.0 0.0 61.2 10.6

Other food 0.7 0.5 0.7 0.1 0.1 3.1 5.7

Textiles 0.4 4.2 0.4 -0.5 -4.9 2.3 2.4

Leather goods 0.2 1.7 0.2 0.0 -2.3 0.3 0.0

Petroleum products 0.0 5.4 0.9 0.0 2.0 0.4 11.6

Other transport 0.0 1.3 0.8 2.6 -4.2 3.4 3.9

Electrical machinery 0.0 3.7 1.4 2.7 -3.5 1.2 5.7

Other manufacturing 0.6 9.0 3.2 15.5 -15.1 -0.1 11.3

Subtotals

Services 1.5 15.2 6.6 0.3 -1.9 -1.3 20.1

Agriculture 3.6 -61.1 5.6 1.9 0.1 67.9 24.7

Natural resources 0.0 0.1 0.0 0.0 0.0 0.0 0.1

Manufacturing 3.6 37.0 9.0 26.6 -38.3 6.4 44.3

Total 8.8 -8.8 21.2 28.9 -40.1 73.0 89.2

Source: GTAP results.

Overall, increased oil exports are clearly driving the changes for Nigeria. These exports

appear to be ‘fuelled’ by increased global economic activity rather than any tariff or market

access changes as such. In agriculture, Doha has a limited impact, while there are marginal

changes in the manufacturing sectors that are driven by resources reallocations with Nigeria

rather than enhanced trade opportunities. Overall, Doha does little for Nigeria except to

increase the value of its considerable oil exports marginally.

23


Section 6 – extending the Cotonou/EPA to an FTA between Nigeria and the EU

The African, Caribbean and Pacific (ACP) countries face a complete shift in their trade

relations with the European Union (EU). Under the Lomé Conventions these countries

enjoyed unilateral trade preferences into the EU market for almost three decades. The

Fourth Lomé Convention was replaced by the Cotonou Agreement in 2000, which extends

these unilateral trade preferences up to the end of 2007. Thereafter, negotiated WTO

compatible reciprocal trade agreements, called Economic Partnership Agreements (EPAs)

will replace the current non-reciprocal preferential trade regime. These EPAs have to be

concluded by no later than the beginning of 2008. EPA negotiations started in September

2002, as at September 2007 they were looking in danger of missing the deadline for

replacing Lomé.

While the reciprocal nature of the trade preferences has been controversial, in general the

emphasis has been much more on ACP access into the EU rather than the converse of EU

preferential access into the ACP countries. However, given that the EPAs are being

negotiated, it will be instructive to examine the welfare implications for reciprocal free trade

access between the EU and Nigeria, or, in effect, a goods-only free trade agreement (FTA)

between the two partners. This will be undertaken using the same GTAP model, with all

other factors held constant.

To set the scene, Tables 10 and 11 display the trade between Nigeria and the EU as

reported in MacMaps for the 2001-year for Nigerian exports (as reported by the EU as

imports from Nigeria) and EU exports to Nigeria (as reported by Nigeria as imports from the

EU). Table 10 demonstrates the overwhelming importance of oil and gas exports from

Nigeria, as they contribute over 88% of the total trade by value. These imports are

effectively duty-free for all products. This suggests that under the Cotonou preferences there

is little left for Nigeria to gain other than ensuring that these preferences become permanent

and safe from a WTO challenge. Trade is somewhat in balance from the EU perspective,

with EU imports from Nigeria totally $4,387 million and EU exports to Nigeria totally a lesser

$4,117 million.

24


Table 10: EU imports from Nigeria, 2001 $million and duty % trade duty % cumulative

Grand Total 4,387.33 0.00% total

oil gas 3,867.66 0.00% 88.16%

other crops 162.82 0.00% 91.87%

leather products 105.58 0.00% 94.27%

other food products 70.06 0.01% 95.87%

petroleum products 51.55 0.00% 97.04%

forestry products 24.34 0.02% 97.60%

machinery, etc. 22.32 0.01% 98.11%

textiles 17.44 0.03% 98.51%

chemicals rubber plastics 14.19 0.00% 98.83%

metal products 10.17 0.00% 99.06%

other 41.20 0.08% 100.00%

Source: MacMaps database

Table 11 now shows the Nigerian imports from the EU for the same period. Here several

features are apparent. The first is that the average duty is assessed at 22.3%, while the

second is that Nigerian imports are much more diverse than the oil-dominated northwards

trade flow. Thus, EU exports can be expected to increase considerably more than EU

imports under an FTA with Nigeria.

Table 11: Nigerian imports from EU (EU exports), 2001, $ million and duty% GTAP Sectors trade $m duty % cumulative %

Grand 4,117.07 22.3% 100.0%

other machinery 1,070.96 14.9% 26.0%

chemicals rubber plastic 676.18 21.1% 42.4%

vehicles 449.14 20.5% 53.3%

other foods 306.69 30.4% 60.8%

electrical goods 295.84 11.5% 68.0%

iron steel 186.59 24.0% 72.5%

petroleum products 155.76 28.2% 76.3%

paper products 149.19 11.6% 79.9%

dairy products 128.17 11.0% 83.0%

metal products 99.58 29.8% 85.5%

textiles 90.95 40.6% 87.7%

beverage tobacco 88.19 116.3% 89.8%

other transport 88.16 10.5% 91.9%

25


GTAP Sectors trade $m duty % cumulative %

other mineral products 87.73 27.4% 94.1%

sugar products 46.63 15.0% 95.2%

non-ferrous metal products 39.30 11.4% 96.2%

forestry products 27.71 53.0% 96.8%

wheat 25.07 5.0% 97.4%

other manufacturing 23.68 40.4% 98.0%

leather products 22.71 47.4% 98.6%

other meats 15.12 59.0% 98.9%

apparel 10.74 50.3% 99.2%

all others 32.92 40.6% 100.0%

Source: MacMaps database

The GTAP results for an FTA

The previous section examined the impacts of the DDA for Nigeria. This section will take

another step and examine the welfare and trade implications of moving to comprehensive

tariff- (and quota-) free merchandise trade between Nigeria and the EU (note that this by-

passes the EPA process and goes straight to a comprehensive goods-only FTA). The

primary scenario considered in this section now entails the result from the removal of

merchandise trade tariff and barriers between Nigeria and the EU as set out in a possible

FTA, with the results as measured in the year 2015.

Results: the implications of the FTA The big picture

Table 12 shows the changes in welfare from the FTA, with the data expressed in US$ million

as one-off increases in annual welfare at the assessed end point of 2015. Nigeria’s gains are

a very solid $856 million, a similar outcome to the EU’s gains of $1,119 million. All other

countries are losers in dollar terms, and especially the US. The Rest of Africa loses some

$118 million, while South Africa’s losses are a lesser $43 million. Overall, global welfare is

worse off by $1.2 billion. The gains to Nigeria are concentrated in the contributing factors of

capital stock ($784m) and terms of trade (ToT) from better relative prices between exports

and imports. Allocative efficiency worsens by $216 million. The EU’s gains are spread

across all of the four categories. In further examining the GTAP results we are able to

decompose the results to confirm that all of Nigeria’s gains (and all other outcomes) result

26


from the abolition of duties in Nigeria against EU imports, as the EU itself has effectively no

tariffs against Nigerian imports to reduce.

Table 12: Change in welfare (EV of income) due to EU/Nigeria FTA, $ million at 2015

Total

Allocative

Efficiency Labour Capital

Term of

Trade

Nigeria 856 -216 -21 784 309

EU 1,119 343 69 81 626

South Africa -43 -9 -5 -13 -16

Rest of Africa -118 -19 -6 -35 -58

China -307 -47 -5 -124 -132

US -730 -126 -9 -542 -54

India -312 -66 -8 -181 -57

Brazil -83 -26 -3 -41 -14

Japan -255 -77 -3 -158 -17

Rest of World -1,344 -214 -9 -540 -581

Total -1,214 -456 3 -769 8


Nigeria’s gains come about exclusively through its own reduction in import tariffs to zero on

EU27 imports, and this increased welfare stems mostly from an increased investment/capital

stock in the country. The reduction in tariffs reduces the price of producing capital goods

used to expand the countries capital stock, and this reduction in turn increases the return to

investments in Nigeria relative to Rest of the World and thereby attracting increased

investments in the country. This increased investment increases the capital stock in the

country and moves the production frontier outwards in Nigeria, thus increasing the amount of

goods that can be produced domestically. Over time this increases welfare by $784 million

as shown under the ‘capital’ heading in Table 12 above.

We note that since the GTAP database and model do not have any international transfer of

receipts between countries, the welfare gains of capital accumulation can be slightly

over/understated in each region/country if part of the capital stock originates from foreign

investments in a given country.

27


Changes in trade flows

Table 13 introduces the aggregate overall changes to trade flows for the partner countries in

2015, expressed as percentage changes for both exports and imports and then in US$

million for the trade balance. Nigeria has increased exports globally once all markets are

accounted for, but imports increase by more as a percent and the country registers a

significant negative trade balance of some $406 million. The trade differences for the EU are

positive.

Table 13: Percentage change in the quantity of total imp\exp & trade balance, 2015

Nigeria EU

Exports % 3.1 0.0

Imports % 5.4 0.1

Trade balance $m -406 99


The specific sector results

This section will discuss the trade changes in the GTAP sectors, with details shown in Tables

14 and 15 for exports and imports respectively. These tables split the GTAP sectors into

primary and secondary agriculture, natural resource and manufacturing before displaying (a)

the AVE or the initial pre-FTA average ad valorem tariff facing either Nigerian exports in the

EU market for exports or EU tariffs into Nigeria for imports, and (b) the change in either

Nigerian exports or imports into or from the EU in response to reducing these border tariffs to

zero, and (c) the changes with the Rest of the World – defined as all others here, and finally

(d) the final overall outcome once trade creation and trade diversion have been accounted

for. These trade flow changes are given in both US dollar values and percentage changes

from the base to put them in perspective. For exports in Table 14, only those sectors where

the changes in total exports are greater than $5.0 million are shown (thus totals may not

reconcile.

28


Table 14: Changes to Nigerian exports following the EU FTA, EU tariffs, $ million and quantity percent% EU27 Rest of World Total change % change change %change change % change AVE in value quantity value quantity value quantity

tariff million $ of exports

million $ exports

million $ of exports

Primary

other crops 0.0 6 5 3 4 9 4.7

subtotal (incl other) 7 11 18

Secondary

other foods 0.0 7 27 4 24 11 25.6

sub total (inc other) 7 7 14

Natural resources

coal oil gas 0.0 98 2 219 1 317 1.4

sub total (inc other) 98 224 322

Manufacturing

textiles 0.0 4 48 2 48 6 48.1

leather 0.0 56 60 7 60 63 60.1

lumber 0.0 14 52 3 51 17 52.1

petroleum products 0.0 1 8 11 8 11 7.5

chemical rubber

plastic 0.0 5 44 8 49 12 46.9

other manufacturing 0.0 10 57 8 56 17 56.2

subtotal (inc other) 97 48 145

services 90 22 125 22 214 21.3

Grand Total 299 415 713 3.1


Given that there is no tariff protection in the EU faced by Nigerian exports we would need to

look elsewhere for the reason as to why these exports increased. That reason is the results

of the second round effects of increased competition on the Nigerian market place reducing

domestic output prices, making Nigerian exports more competitive in the global market place.

We noted above in the general literature review section that many analysts feared that

preferential access of EU imports into Africa would destroy the African production base. Our

results suggest just the opposite in that the increased competition has made Nigeria more

competitive internationally.

29


For imports into Nigeria from the EU, as shown in Table 15 (where again only those sectors

where the changes are at least $5 million are shown), there are increases in most sectors in

response to some very large tariff levels. Overall, imports from the EU increase by just on

five billion dollars, but as some $3.8 billion of this is trade diversion away from the Rest of the

World the net result is a much lesser increase of only $1,120 million in new trade or trade

creation. More importantly, this trade diversion suggests a large potential tariff revenue loss

to Nigeria, and indeed a ‘rule of thumb’ calculation from the GTAP results indicates that this

loss is in the vicinity of $900 million.

By sector, there is an increase in agricultural imports from the EU of $446 million, with $262

of this diversion from other sources for a net increase of $184million. As there are no

changes in natural resources the remaining increases are in the manufacturing sector. Here

there are several large changes shown, but again much of this is trade diversion from other

sources.

Table 15: Changes to Nigerian imports following the EU FTA, Nigerian tariffs, $ m and quantity % EU27 Rest of World Total

change % change change %change change %change

AVE in value quantity value quantity value quantity

tariff million $ of imports million $ imports million $ imports

Primary

Vegetables, fruits 94.9 16 684 -6 -33 10 55.7

subtotal (incl other) 43 -27 16

Secondary

other meats 60.0 60 115 -21 -97 40 53.3

vegetable oils 66.6 60 1,043 -41 -61 19 26.5

dairy products 10.8 78 37 -62 -34 15 3.8

other foods 24.3 112 25 -66 -48 46 7.7

bev tobacco 120.8 80 81 -29 -71 52 36.8

sub total (inc other) 403 -235 168

Manufacturing

textiles 40.0 512 476 -337 -54 175 23.8

apparel 51.4 145 875 -84 -55 61 35.5

leather 47.3 118 285 -77 -83 40 29.8

lumber 53.2 90 202 -22 -83 68 94.7

petroleum product 27.9 621 82 -323 -35 298 17.9

chem rub plastic 20.7 682 104 -509 -41 172 9.1

30


EU27 Rest of World Total

change % change change %change change %change

AVE in value quantity value quantity value quantity

tariff million $ of imports million $ imports million $ imports

other mineral prod 27.0 241 101 -189 -50 52 8.4

iron/steel 23.6 211 130 -167 -34 43 6.6

non ferrous metal 11.2 19 75 -15 -28 5 5.9

metal products 29.9 160 327 -128 -40 32 8.7

vehicles 20.8 236 50 -179 -48 57 6.7

other transport 10.9 59 120 -67 -9 -9 -1.1

electrical goods 12.4 285 91 -250 -31 35 3.1

other machinery 14.8 1,047 90 -876 -38 171 4.9

other

manufacturing 38.9 144 230 -93 -72 51 26.7

subtotal (inc other) 4,613 -3,360 1,253

services 0.0 -137 -6 -182 -6. -319 -6.2

Grand Total 4,926 -3,806 1,120 5.4


Changes in output

Table 16 follows through from the trade results to show the changes in the quantity of output,

exports and imports, and the change in the real price of these outputs. In order to keep the

table manageable only the GTAP sectors where the change in production is at least $10

million in either direction are shown. The output changes are spread across a number of

sectors, with petroleum products being the main changes in value terms. Note that there is a

price reduction in all of the sectors shown as a result of the FTA with the EU.

Table 16: Change in quantity of output, exports, imports and real prices (%) Change in real price of production % change endowments value $ million in production and output prices other grains -28 -0.4 -1.8

vegetables, fruits -164 -0.2 -2.1

Subtotal (with others) -189

other meats -35 -68.5 -5.4

31


Change in real price of production % change endowments value $ million in production and output prices other foods -32 -4.6 -6.0

beverage, tobacco -47 -21.2 -4.6


fish -83 -0.1 -6.6

coal oil gas 166 0.8 -0.2

Subtotal (with others) 87

textiles -54 -10.1 -5.4

apparel -46 -7.5 -5.7

leather 33 26.4 -5.9

lumber -64 -15.3 -6.6

petroleum products -273 -6.5 -1.9

chemical rubber plastic -88 -0.4 -6.3

iron & steel -31 2.9 -6.8

metal products -27 4.4 -7.4

vehicles -17 -6.5 -7.0

Machinery, etc. 12 26.4 -5.5


services -443 3.8 -5.0

Grand Total -1,225

Source: GTAP simulations

Section 7 – Labour markets and the Unskilled Labour closure

In the standard GTAP model, the total labour supply is fixed exogenously. In other words, the

model assumes that there is full employment in all countries/regions of the world. This is a

very simple assumption which is of course not always correct, and especially so in the case

of Nigeria with its large unemployment rate of around 25%. Therefore we have extended the

standard model so that the total unskilled labour supply is modelled using a labour supply

curve which specifies the relation between labour supply and the real wage in each region.

Importantly, note that we have the same labour market closure for all countries in the

simulation.

We believe that this particular section of the analysis potentially makes an important

contribution to the nexus between trade policy and welfare redistribution in developing

32


countries. The results of the FTA simulation as given in this paper are driven from the labour

market assumption as displayed in rows (B) in Table 17 below21, where the welfare gains for

Nigeria are some $856 million and the increased real GDP is 1.0%. Not shown earlier is that

the EU FTA, all other things held constant, reduces Nigeria’s CPI or inflation rate by 4.6%

under the assumption used. The key employment issue is the one shown in Table 17 in the

centre of the table (second bloc B) under the heading ‘Nigeria’, where the Nigerian story on

unskilled labour is told (recall that the supply of skilled labour is held fixed). Under this

closure, whereby the unskilled labour supply is a function of the unemployment rate, the

employment of unskilled labour decreases by 0.37 percent and the real wage rate by 1.1%.

To the right of this we see limited change in the EU.

Section (A) in Table 19 shows what may be thought of as a general trade union position

seeking to protect those already in employment. In this extreme position, the level of

employment is fixed and all adjustments must take place within the wage rate. This is good

for those employed, but their wage rate decreases by 1.7% in order for them to keep these

jobs. It is however marginally better for the economy, as the welfare gains increase to

$912 million and GDP increases by 1.1%.

At the other extreme we have section (D), where the real wage is fixed and all adjustments

must come through the number of unskilled persons employed. Here the results show that

employment is down by 1.0% in order to maintain this wage rate, and that has a cost to the

economy as the welfare gains are lower ($763 million). This is again in turn contrasted by

alternative (C), where the real wage rate is pegged to the inflation rate (recognising of course

that this inflation rate is itself a function of the labour market closure). Here, the welfare gains

are some $1,269 million or 1.6% of real GDP with the real wage change set at the inflation

rate of minus 5.5%. The employment change is now an increase of 2.4% (this is because the

inflation rate is negative and wages are falling in real but not nominal terms). This is a

dramatic result which highlights that if a developing country like Nigeria is serious about

increasing both welfare and employment in the economy, then policies moving towards

creating jobs rather than rewarding those actually in employment are a superior option for

policy makers.

21 The mathematical derivation of the equation used is shown in Annex B to ensure readers that it is both mathematically correct and economically sensible.

33


Table 17: Unskilled labour market closure, % change employment/real wage Nigeria

EV real CPI

million US$ GDP % % Nigeria EU27

Fixed Employment 0.00 0.00

912 1.10 -4.70 A empl. Real wage -1.72 0.05

U Employment -0.37 0.00

856 1.00 -4.60 B (1-U) Real wage -1.10 0.05

R. Wage Employment 2.40 0.04

1269 1.60 -5.50 C CPI Real wage -5.48 0.03

Fixed Employment -1.03 0.12

763 0.90 -4.30 D R. Wage Real wage 0.00 0.00


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36


Annex table A1: Changes in Nigerian import tariffs with Doha Initial tariffs (percent) Tariff changes (percentage points)

Sector/source Rest of Africa EU US

Rest of World

Rest Africa EU US

Rest of World

Wheat 1.0 5.0 5.0 5.0 no changes

Other grains 37.2 52.0 33.3 30.9 0.71 0.28 0.00 0.01

Vegetables, fruits 99.9 95.0 100.0 77.1 6.11 9.50 10.00 4.64

Oil seeds 19.5 19.5 18.0 8.0 no changes

Plant fibres 5.1 2.7 5.0 4.5 no changes

Other crops 21.6 23.3 15.1 27.2 no changes

Cattle 19.9 1.8 17.4 9.5 no changes

Other agr products 21.5 24.4 45.4 28.0 0.00 0.00 2.22 0.00

Fish 11.2 1.3 15.1 6.2 no changes

Forestry 11.2 11.2 15.0 5.9 no changes

Coal oil gas 13.8 8.0 15.0 2.0 no changes

Other minerals 16.7 17.2 10.7 9.9 no changes

Beef 2.4 10.2 5.2 9.3 no changes

Poultry etc 51.3 60.0 31.8 27.2 0.16 0.79 0.27 0.66

Vegetable oils 60.4 66.6 31.5 65.8 0.16 2.12 0.53 0.30

Dairy 30.6 10.8 25.6 16.0 2.59 0.15 1.93 0.02

Rice products 73.3 68.3 75.0 75.0 no change

Sugar 17.4 15.0 15.0 17.4 no change

Other foods 45.2 24.3 16.1 19.9 0.07 0.24 0.40 0.35

Beverages,

tobacco 139.3 120.8 62.2 133.8 0.20 0.50 0.68 0.61

Textiles 37.8 40.0 54.7 45.0 no changes

Clothing 48.3 51.4 50.6 53.9 no changes

Leather products 41.7 47.3 49.2 46.2 no changes

Forestry products 35.4 53.2 59.3 57.2 no changes

Paper products 11.8 10.4 6.5 7.7 no changes

Petroleum prod 28.2 27.9 29.6 24.4 no changes

Chem plast rubber 54.3 20.7 19.7 20.4 no changes

Mineral products 24.5 27.0 25.1 14.8 no changes

Iron steel 18.0 23.6 29.0 24.9 no changes

Non-ferrous metal 10.6 11.2 14.3 11.1 no changes

Metal products 33.4 29.9 28.6 33.8 no changes

Vehicles 35.0 20.8 19.1 19.0 no changes

Other transport 12.9 10.9 10.5 12.6 no changes

37


Initial tariffs (percent) Tariff changes (percentage points)

Sector/source Rest of Africa EU US

Rest of World

Rest Africa EU US

Rest of World

Electrical mach 15.9 12.4 12.4 21.9 no changes

Machinery, etc. 17.5 14.8 16.4 23.2 no changes

Oth manufactures 61.8 38.9 29.9 34.1 no changes

Source: GTAP results. Note that here (and in the next Table) ROW refers to the ‘Rest of the World’ as used in the GTAP simulations and not all other countries except the Rest of Africa, EU and the US. This is because while there are some differences in the tariffs for say India and China the trade flows are not significant.

38


Annex Table A2: Changes in export tariffs faced by Nigeria as a result of Doha.

Initial tariffs (percent) Tariff changes (percentage points)

Sector/destination Rest of Africa EU US

Rest of World

Rest Africa EU US

Rest of World

Wheat 5.0 0.0 0.0 0.9 0 0 0 0Other grains 5.0 0.0 2.3 26.2 0 0 1.05 3.66Vegetables, fruits 20.0 1.6 0.6 17.3 0 0.1 0.16 2.03Oil seeds 15.4 0.0 0.0 11.2 0.01 0 0 0Plant fibres 5.0 0.0 2.0 1.0 0 0 0 0.24Other crops 20.7 0.0 0.1 3.3 2.41 0 0.03 0.01Cattle 11.9 0.0 0.0 1.7 0 0 0 0Other agr products 12.4 0.0 0.0 1.1 0.01 0 0 0.04Fish 10.0 0.0 0.0 4.2 0 0 0 0.2Forestry 10.8 0.0 0.0 4.1 0.37 0 0.01 0.11Coal oil gas 2.3 0.0 0.0 2.6 0.01 0 0 0.02Oth minerals 11.3 0.0 0.1 1.7 0 0 0.05 0.04Beef 0.0 81.6 0.0 12.5 0 0 0 2.29Poultry, etc. 10.0 0.0 0.0 2.2 0.05 0.02 0 0.16Vegetable oils 16.7 0.2 0.2 7.2 0 0.1 0.11 1.25Dairy 5.3 26.8 11.1 15.9 0 12.02 4.34 0.9Rice products 9.9 0.0 0.0 1.7 0 0 0 0.01Sugar 21.9 0.0 0.0 2.5 0 0 0 0.01Other foods 19.2 0.0 0.2 6.6 0 0.02 0.09 0.16Beverages, tobacco 20.6 0.9 7.7 20.9 0.01 0.5 0.13 1.78Textiles 18.9 0.0 0.0 9.3 0.01 0 0 0.89Clothing 20.8 0.0 0.0 12.8 0 0 0 4.01Leather products 17.8 0.0 0.1 5.1 0.01 0 0.02 0.13Forestry products 14.8 0.0 0.4 5.4 0.31 0 0.12 0.37Paper products 12.7 0.0 0.1 3.0 0 0 0 0.13Petroleum products 11.4 0.0 1.2 4.8 0.28 0 0 0.67Chem plast rubber 14.5 0.0 1.1 6.2 0.01 0 0.59 1.16Mineral products 18.7 0.1 1.5 11.4 0.01 0.04 0.35 1.46Iron steel 14.0 0.0 0.0 7.6 0 0 0 1.49Non-ferrous metal 11.6 0.0 0.2 3.6 0 0 0.02 0Metal products 17.7 0.0 0.9 6.6 0.03 0 0 1.39Vehicles 11.4 0.0 0.0 6.5 0 0 0 0.67Other transport 12.7 0.0 0.0 0.8 0 0 0 0.05Electrical machinery 9.0 0.0 0.6 0.7 0 0 0 0.09Machinery, etc. 8.3 0.0 0.9 5.9 0.08 0 0.18 0.86Other manufactures 28.4 0.0 0.3 0.9 0.04 0 0.13 0.06

Source: GTAP results – see footnote for the previous table.

39


Annex B: Derivation of the labour market assumptions

In the standard GTAP model the total labour supply is fixed exogenously. In other words, the

model assumes that there is full employment in all countries/regions of the world. This is a

very simple assumption which is of course not always correct and especially so in the case of

Nigeria with its large unemployment rate of around 25%. Therefore we have extended the

standard model so that the total unskilled labour supply is modelled using a labour supply

curve which specifies the relation between labour supply and the real wage in each region.

This is shown in Figure A1.

Figure A1. Labour supply curve determining employment level and the real wage

In each region/country we assume that the unskilled labour supply curve will have the shape

above according to the following mathematical equation:22

l = a – b/real wage

Where l is the amount of employed unskilled labour, a > 0 is an asymptote interpreted as the

maximal potential amount of available unskilled labour force and b is a positive parameter

determining the curve in Figure 1. The labour supply elasticity E in respect to the real wage is

equal to:

E = b/[(a x real wage) – b]

But the labour supply elasticity can also be expressed as a function of the unemployment

rate using the fact that

22 The assumed mathematical equation depicting the labour supply curve is taken from work done by van Meijl et al. (2006) in modelling land use in the GTAP model.

Real wage Asymptote

Labour force

40


Unemployment rate = 1 – l/a

So that the labour supply elasticity E can be expressed as a function of the unemployment

rate (u)

E = u/(1 – u)

which is directly observable in statistics from the International Labour Organisation (ILO) for

many countries in the world. This is very convenient since the GTAP model/database is a

global model and the labour supply curve has to be estimated for all regions/countries in the

model. The ILO calculated elasticities for the 12 countries/regions specified in this paper, and

these are shown in Table A1 below.

Table A1: Unemployment rate and estimated unskilled labour supply elasticities.

U Elasticity

South Africa 0.27 0.362

Botswana 0.24 0.312

RSACU 0.34 0.511

Nigeria 0.25 0.333

Rest of Africa 0.25 0.333

EU27 0.09 0.100

US 0.05 0.054

India 0.04 0.045

China 0.04 0.044

Brazil 0.09 0.098

Japan 0.04 0.046

Rest of World 0.08 0.081

Source: ILO (International Labour Organisation) and own assumptions.

41


Working Papers

2002 US safeguard measures on steel imports: specific implications by Niel Joubert & Rian Geldenhuys. WP 1/2002, April A few reflections on Annex VI to the SADC Trade Protocol by Jan Bohanes WP 2/2002, August Competition policy in a regional context: a SADC perspective on trade investment & competition issues by Trudi Hartzenberg WP 3/2002, November Rules of Origin and Agriculture: some observations by Hilton Zunckel WP 4/2002, November 2003 A new anti-dumping regime for South Africa and SACU by Stuart Clark & Gerhard Erasmus WP 1/2003, May Why build capacity in international trade law? by Gerhard Erasmus WP 2/2003, May The regional integration facilitation forum: a simple answer to a complicated issue? by Henry Mutai WP 3/2003, July The WTO GMO dispute by Maxine Kennett WP 4/2003, July WTO accession by Maxine Kennett WP 5/2003, July On the road to Cancun: a development perspective on EU trade policies by Faizel Ismail WP 6/2003, August GATS: an update on the negotiations and developments of trade in services in SADC by Adeline Tibakweitira WP 7/2003, August An evaluation of the capitals control debate: is there a case for controlling capital flows in the SACU-US free trade agreement? by Calvin Manduna WP 8/2003, August Non-smokers hooked on tobacco by Calvin Manduna WP 9/2003, August Assessing the impact of trade liberalisation: the importance of policy complementarities and policy processes in a SADC context by Trudi Hartzenberg WP 10/2003, October

42


An examination of regional trade agreements: a case study of the EC and the East African community by Jeremy Everard John Streatfeild WP 11/2003, October Reforming the EU sugar regime: will Southern Africa still feature? by Daniel Malzbender WP 12/2003, October 2004 Complexities and inadequacies relating to certain provision of the General Agreement on Trade in Services by Leon Steenkamp WP 1/2004, March Challenges posed by electronic commerce to the operation and implementation of the General Agreement on Trade in Services by Leon Steenkamp WP 2/2004, March Trade liberalisation and regional integration in SADC: policy synergies assessed in an industrial organisation framework by Martine Visser and Trudi Hartzenberg WP 3/2004, March Tanzania and AGOA: opportunities missed? by Eckart Naumann and Linda Mtango WP 4/2004, March Rationale behind agricultural reform negotiations by Hilton Zunkel WP 5/2004, July The impact of US-SACU FTA negotiations on Public Health in Southern Africa by Tenu Avafia WP 6/2004, November Export Performance of the South African Automotive Industry by Mareika Meyn WP 7/2004 December 2005 Textiles and clothing: Reflections on the sector’s integration into the post-quota environment by Eckart Naumann WP 1/2005, March Assessing the Causes of Sub-Saharan Africa's Declining Exports and Addressing Supply-Side Constraints by Calvin Manduna WP 2/2005, May A Few Reflections on Annex VI to the SADC Trade Protocol by Jan Bohanes WP 3/2005, June Tariff liberisation impacts of the EAC Customs Union in perspective by Heinz - Michael Stahl WP4/2005, August Trade facilitation and the WTO: A critical analysis of proposals on trade facilitation and their implications for African countries by Gainmore Zanamwe WP5/2005, September An evaluation of the alternatives and possibilities for countries in sub-Saharan Africa to meet the sanitary standards for entry into the international trade in animals and animal products by Gideon K. Brückner WP 6/2005, October

43


Dispute Settlement under COMESA by Felix Maonera WP7/2005, October The Challenges Facing Least Developed Countries in the GATS Negotiations: A Case Study of Lesotho by Calvin Manduna WP8/2005. November Rules of Origin under EPAs: Key Issues and New Directions by Eckart Naumann WP9/2005, December Lesotho: Potential Export Diversification Study: July 2005 by Ron Sandrey, Adelaide Matlanyane, David Maleleka and Dirk Ernst van Seventer WP10/2005, December African Member States and the Negotiations on Dispute Settlement Reform in the World Trade Organization by Clement Ng’ong’ola WP11/2005, December The ability of select sub-Saharan African countries to utilise TRIPs Flexibilities and Competition Law to ensure a sustainable supply of essential medicines: A study of producing and importing countries by Tenu Avafia, Jonathan Berger and Trudi Hartzenberg WP12/2006, August Intellectual Property, Education and Access to Knowledge in Southern Africa by Andrew Rens, Achal Prabhala and Dick Kawooya WP13/2006, August

The Genetic Use Restriction Technologies, Intellectual Property Rights and Sustainable Development in Eastern and Southern Africa by Patricia Kameri-Mbote and James Otieno-Odek WP14/2006, August 2006 Agriculture and the World Trade Organization – 10 Years On by Ron Sandrey WP1/2006, January Trade Liberalisation: What exactly does it mean for South Africa? by Ron Sandrey WP2/2006, March South African merchandise trade with China by Ron Sandrey WP3/2006, March The Multifibre Agreement – WTO Agreement on Textiles and Clothing by Eckart Naumann WP4/2006, April The WTO – ten years on: trade and development by Catherine Grant WP5/2006, May A review of the results of the 6th WTO Hong Kong Ministerial Conference – Considerations for African, Caribbean and Pacific (ACP) Countries by Calvin Manduna WP6/2006, June Trade Liberalisation: What exactly does it mean for Lesotho? by Ron Sandrey , Adelaide Matlanyane and David Maleleka WP7/2006, June A possible SACU/China Free Trade Agreement (FTA): Implications for the South African manufacturing sector by Hans Grinsted Jensen and Ron Sandrey WP8/2006, July

44


Ecolabels and fish trade: Marine Stewardship Council certification and the South African hake industry by Stefano Ponte WP9/2006, August South African Merchandise Trade with India by Ron Sandrey WP10/2006, August Trade Creation and Trade Diversion Resulting from SACU trading Agreements by Ron Sandrey WP11/2006, August The ability of select sub-Saharan African countries to utilise TRIPs Flexibilities and Competition Law to ensure a sustainable supply of essential medicines: A study of producing and importing countries byTenu Avafia, Jonathan Berger and Trudi Hartzenberg WP12/2006, August Intellectual Property, Education and Access to Knowledge in Southern Africa by Andrew Rens, Achal Prabhala and Dick Kawooya WP13/2006, August The Genetic Use Restriction Technologies, Intellectual Property Rights and Sustainable Development in Eastern and Southern Africa by Patricia Kameri-Mbote and James Otieno-Odek WP14/2006, August Initiation of WTO Trade Disputes by the private sector – need for SADC/COMESA countries to develop national mechanisms. by Felix Maonera WP15/2006, October The Trade and Economic Implications of the South African Restrictions regime on imports of clothing from China by Ron Sandrey WP16/2006, October The Memorandum of Understanding and quotas on textile and clothing imports from China: Who wins? by Gustav Brink WP17/2006, October WTO and the Singapore Issues by Ron Sandrey WP 18/2006, November How can South Africa exploit new opportunities in agricultural export markets? Lessons from the New Zealand experience. by Ron Sandrey & Nick Vink WP 19/2006, November Promoting agricultural trade and investment synergies between South Africa and other SADC Member countries. by N. Vink, R. Sandrey, C.L. McCarthy & H.E. Zunckel WP 20/2006, November Proposed amendments to the anti-dumping regulations: are the amendments in order? by Gustav Brink WP 21/2006, November 2007 Examining the India, Brazil and South African (IBSA) Triangular Trading Relationship Ron Sandrey and Hans Jensen WP 1/2007, February Government-Business Interface in dispute settlement: Lessons for SACU Augustine Mandigora WP2/2007, February

45


South Africa and Japan: towards a new trading relationship? Ron Sandrey WP3/2007, March South African agriculture protection: how much policy space is there? Ron Sandrey, Olubukola Oyewumi, Bonani Nyhodo and Nick Vink WP4/2007, March South African agriculture: a possible WTO outcome and FTA policy space - a modelling approach. Ron Sandrey and Hans Jensen WP5/2007, March Revisiting the South African-China trading relationship Ron Sandrey WP6/2007, March Safeguards in South Africa: What Lessons from the First Investigation? Gustav Brink, G. 2007. WP7/2007, May South African Wine – An Industry in Ferment Stefano Ponte and Joachim Ewert WP8/2007, October Governance in the Value Chain for South African Wine Stefano Ponte WP9/2007, October Trade Policy options for Nigeria: GTAP simulation analysis Ron Sandrey, Hans Grinsted Jensen and Olubukola Oyewumi WP10/2007, December Trade Briefs 2002 Cost sharing in international dispute settlement: some reflections in the context of SADC by Jan Bohanes & Gerhard Erasmus. TB 1/2002, July Trade dispute between Zambia & Zimbabwe by Tapiwa C. Gandidze. TB 2/2002, August 2003 Non-tariff barriers: the reward of curtailed freedom by Hilton Zunckel TB 1/2003, February The effects of globalization on negotiating tactics by Gerhard Erasmus & Lee Padayachee TB 2/2003, May The US-SACU FTA : implications for wheat trade by Hilton Zunckel TB 3/2003, June Memberships in multiple regional trading arrangements : legal implications for the conduct of trade negotiations by Henry Mutai TB 4/2003, August

46


2004 Apparel Trade and Quotas: Developments since AGOA’s inception and challenges ahead by Eckart Naumann TB 1/2004, March Adequately boxing Africa in the debate on domestic support and export subsidies by Hilton E Zunckel TB 2/2004, July Recent changes to the AGOA legislation by Eckart Naumann TB 3/2004, August 2005 Trade after Preferences: a New Adjustment Partnership? by Ron Sandrey TB1/2005, June TRIPs and Public Health: The Unresolved Debate by Tenu Avafia TB2/2005, June Daring to Dispute: Are there shifting trends in African participation in WTO dispute settlement? by Calvin Manduna TB3/2005, June South Africa’s Countervailing Regulations by Gustav Brink TB4/2005, August Trade and competitiveness in African fish exports: Impacts of WTO and EU negotiations and regulation by Stefano Ponte, Jesper Raakjær Nielsen, & Liam Campling TB5/2005, September Geographical Indications: Implications for Africa by Catherine Grant TB6/November 2006 Southern Africa and the European Union: the TDCA and SADC EPA by Catherine Grant TB1/2006, May Safeguarding South Africa’s clothing, textile and footwear industries by Gustav Brink TB2/2006, May Agricultural Safeguards in South Africa by Gustav Brink TB3/2006, May The WTO Trade Policy Review Mechanism: application and benefit to SACU by Paul Kruger TB4/2006, June Amendment to TRIPs agreement: consensus or dissension? by Madalitso Mutuwazovu Mmeta TB5/2006, September

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2007 Southern Africa and the trading relationship with the European Union Ron Sandrey and Taku Fundira TB1/2007, January The development pillar of the EPA negotiation Catherine Grant TB2/2007, February The use and limitations of computer models in assessing trade policy Ron Sandrey TB3/2007, March Competition and infant industry protection within SACU: the case of UHT milk in Namibia Omu Kakujaha-Matundu TB4/2007, March Sunset Reviews in South Africa: New Direction given by the High Court Gustav Brink TB5/2007, July South African quotas on Chinese clothing and textiles: has there been sufficient economic justification? Johann van Eeden and Ron Sandrey TB6/2007, September Sunset reviews in South Africa: how long is five years? Gustav Brink TB7/2007, November The four pillars of South African agricultural trade policy Ron Sandrey TB8/2007, November Update: South African quotas on Chinese clothing and textiles: has there been sufficient economic justification? Taku Fundira TB09/2007, December Countervailing Reviews: Countering Subsidised Exports or Countering Subsidy Programmes? Gustav Brink TB10/2007, December Books

2007 Monitoring Regional Integration in Southern Africa: Volume 6 (2006) Editors: Anton Bösl, Willie Breytenbach, Trudi Hartzenberg, Colin McCarthy, Klaus Schade February 2007, ISBN 978-0-9584680-5-3 Economic Partnership Agreements: Handbook Authors: Talitha Bertelsman Scott and Catherine Grant April 2007 South Africa's way ahead: trade policy options Authors: Ron Sandrey, Hans Grinsted Jensen, Nick Vink, Taku Fundira September 2007, ISBN 978-0-9584680-7-7

trade policy options for nigeria: a gtap simulation analysis

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