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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
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.
Trade Policy options for Nigeria: a GTAP simulation analysis
tralac Working Paper No. 10. [Online]. Available: www.tralac.org.
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1
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 nonagricultural 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 socalled 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 G10 8 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 leastdeveloped 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 revisited (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 agricultureonly 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 SubSaharan Africa and South Asia.
In a similar review Kwa (2006) comes to similar conclusions citing many of these same mainstream 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 inputoutput 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.
Trade Policy options for Nigeria: a GTAP simulation analysis
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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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
Real
GDP
Labour Force
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
Trade Policy options for Nigeria: a GTAP simulation analysis
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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 (%)
Developed countries
Tariff rate (%)
Tariff cut (%)
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 nonagricultural 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.
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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:
t1 =
(a or b) × t 0
(a or b) + t 0
where,
t1 =
Final bound tariff
t0 =
Base rate
a=
Coefficient for developed Members (= 5)
b=
Coefficient for developing Members subject to the formula (= 20)
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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 welfare 19 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
EV US$m
Agr Export
Agr market
Subsidies
access
NAMA
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.
19
The 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 $10 million better off at the final year than it otherwise
would have been in the absence of that change. There is also little said about the distributional
aspects of these gains as there is only one ‘representative household’ in GTAP.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
19
Total
EV US$m
Agr Export
Agr market
Subsidies
access
NAMA
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
EU
Source: GTAP results
Nigeria’s gains are $198 million: a loss of $61million from abolition of export subsidies 20 ,
$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
EV
Nigeria
Global total
Allocative
Unskilled
Capital
Terms of
efficiency
Labour
stock
trade
198
18
2
36
143
48,180
20,430
225
27,539
-14
Source: GTAP results
20
This occurs because global agricultural export prices increase as a result, and as Nigeria is an
agricultural importer this has a negative impact.
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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
TOT
Nigeria
Real
Factor
GDP
Income
0.46
0.09
Contributions from
Land
0.45
Unskilled
Skilled
labour
labour
0.01
0.02
Natural
Capital
0.01
resources
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
Income
Nigeria
Land
0.12
Unskilled
Skilled
labour
labour
0.05
0.07
Capital
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.
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WP10/2007 tralac | December 2007
21
Table 7: Changes in Nigerian production and trade (%) from base post-Doha
Change
Contributions from
Output %
Ex Sub
Change in Quant %
Agr access
NAMA
exports
imports
Resources
Coal/oil/gas
0.08
0.00
0.00
0.08
0.08
0.04
-7.33
-0.05
-0.47
-6.81
-11.05
-0.05
0.17
-0.05
-0.02
0.25
0.49
0.49
Manufacturing
Leather
Services
Source: GTAP results
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
Other crops
Rest of
Africa
0.2
EU
-1.8
US
-0.1
Brazil
0.0
Rest of
World
-1.9
Total
-3.3
Coal oil gas
-69.2
53.5
103.2
24.2
11.9
179.7
-0.3
-12.0
-0.9
-0.5
-0.1
-13.7
-0.4
-4.6
-1.2
0.0
-0.4
-6.4
0.2
-3.6
-0.1
0.0
-1.2
-4.0
Leather goods
Subtotals
Services
Agriculture
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WP10/2007 tralac | December 2007
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Natural resources
Manufacturing
Total
Rest of
Africa
-69.2
EU
53.5
US
103.2
Brazil
24.2
Rest of
World
11.9
Total
178.9
-4.5
-15.1
-1.1
-0.3
1.2
-17.7
-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
Other crops
0.0
0.3
-0.3
India
0.0
Coal oil gas
0.0
0.0
0.0
0.0
Milk products
1.7
-53.0
-0.1
Other food
0.7
0.5
Textiles
0.4
Leather goods
China
0.0
Rest of
World
0.0
Total
0.0
0.0
0.0
0.0
0.0
0.0
61.2
10.6
0.7
0.1
0.1
3.1
5.7
4.2
0.4
-0.5
-4.9
2.3
2.4
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
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
Subtotals
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.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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.
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WP10/2007 tralac | December 2007
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%
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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GTAP Sectors
trade $m
duty %
cumulative %
other mineral products
87.73
27.4%
94.1%
sugar products
46.63
15.0%
95.2%
non-ferrous metal products
39.30
11.4%
96.2%
forestry products
27.71
53.0%
96.8%
wheat
25.07
5.0%
97.4%
other manufacturing
23.68
40.4%
98.0%
leather products
22.71
47.4%
98.6%
other meats
15.12
59.0%
98.9%
apparel
10.74
50.3%
99.2%
all others
32.92
40.6%
100.0%
Source: MacMaps database
The GTAP results for an FTA
The previous section examined the impacts of the DDA for Nigeria. This section will take
another step and examine the welfare and trade implications of moving to comprehensive
tariff- (and quota-) free merchandise trade between Nigeria and the EU (note that this bypasses the EPA process and goes straight to a comprehensive goods-only FTA). The
primary scenario considered in this section now entails the result from the removal of
merchandise trade tariff and barriers between Nigeria and the EU as set out in a possible
FTA, with the results as measured in the year 2015.
Results: the implications of the FTA
The big picture
Table 12 shows the changes in welfare from the FTA, with the data expressed in US$ 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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
Allocative
Efficiency
Total
Nigeria
Term of
Labour
Trade
Capital
856
-216
-21
784
309
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
EU
Source: GTAP results
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 $784 million
as shown under the ‘capital’ heading in Table 12 above.
We note that since the GTAP database and model do not have any international transfer of
receipts between countries, the welfare gains of capital accumulation can be slightly
over/understated in each region/country if part of the capital stock originates from foreign
investments in a given country.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
27
Changes in trade flows
Table 13 introduces the aggregate overall changes to trade flows for the partner countries in
2015, expressed as percentage changes for both exports and imports and then in US$
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
-406
99
Trade balance $m
Source: GTAP results
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.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
28
Table 14: Changes to Nigerian exports following the EU FTA, EU tariffs, $ million and
quantity percent%
EU27
AVE
tariff
Rest of World
Total
change
% change
change
%change
change
% change
in value
million
$
quantity
value
million
$
quantity
value
million
$
quantity
of exports
exports
of exports
Primary
other crops
0.0
6
5
7
subtotal (incl other)
3
4
11
4.7
9
18
Secondary
other foods
0.0
7
27
4
7
sub total (inc other)
24
7
11
25.6
14
Natural resources
coal oil gas
0.0
98
2
98
sub total (inc other)
219
1
224
1.4
317
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
plastic
0.0
5
44
8
49
12
46.9
other manufacturing
0.0
10
57
8
56
17
56.2
chemical rubber
subtotal (inc other)
97
services
90
Grand Total
299
48
22
125
145
22
415
214
21.3
713
3.1
Source: GTAP results
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.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
43
subtotal (incl other)
-33
-27
10
55.7
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
403
sub total (inc other)
-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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
38.9
144
230
-93
-72
51
26.7
other
manufacturing
4,613
subtotal (inc other)
0.0
services
-3,360
-137
-6
4,926
Grand Total
1,253
-182
-6.
-3,806
-319
-6.2
1,120
5.4
Source: GTAP results
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
-28
in production
-0.4
and output prices
-1.8
vegetables, fruits
-164
-0.2
-2.1
Subtotal (with others)
-189
-68.5
-5.4
other grains
other meats
-35
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
31
Change in
real price of
production
other foods
beverage, tobacco
Subtotal (with others)
% change
endowments
value $ million
-32
in production
-4.6
and output prices
-6.0
-47
-21.2
-4.6
-117
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
-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
12
26.4
-5.5
3.8
-5.0
petroleum products
Machinery, etc.
Subtotal (with others)
-563
services
-443
-1,225
Grand Total
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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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 $1,269 million or 1.6% of real GDP with the real wage change set at the inflation
rate of minus 5.5%. The employment change is now an increase of 2.4% (this is because the
inflation rate is negative and wages are falling in real but not nominal terms). This is a
dramatic result which highlights that if a developing country like Nigeria is serious about
increasing both welfare and employment in the economy, then policies moving towards
creating jobs rather than rewarding those actually in employment are a superior option for
policy makers.
21
The mathematical derivation of the equation used is shown in Annex B to ensure readers that it is
both mathematically correct and economically sensible.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
33
Table 17: Unskilled labour market closure, % change employment/real wage
Nigeria
EV
real
CPI
million US$
GDP %
%
912
1.10
-4.70
A
1269
763
1.00
-4.60
1.60
-5.50
0.90
-4.30
B
C
D
EU27
Fixed
Employment
0.00
0.00
empl.
Real wage
-1.72
0.05
Employment
-0.37
0.00
(1-U)
Real wage
-1.10
0.05
R. Wage
Employment
2.40
0.04
CPI
Real wage
-5.48
0.03
Fixed
Employment
-1.03
0.12
R. Wage
Real wage
0.00
0.00
U
856
Nigeria
Source: GTAP results
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Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
36
Annex table A1: Changes in Nigerian import tariffs with Doha
Initial tariffs (percent)
Tariff changes (percentage points)
Rest
Rest
Sector/source
Wheat
of
Africa
EU
US
of
Rest
World
Africa
Rest of
EU
US
World
1.0
5.0
5.0
5.0
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
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
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
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
Beef
no changes
0.00
Beverages,
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
37
Initial tariffs (percent)
Tariff changes (percentage points)
Rest
Rest
Sector/source
of
Africa
EU
US
of
Rest
World
Africa
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
Rest of
EU
US
World
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.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
38
Annex Table A2: Changes in export tariffs faced by Nigeria as a result of Doha.
Sector/destination
Wheat
Other grains
Vegetables, fruits
Oil seeds
Plant fibres
Other crops
Cattle
Other agr products
Fish
Forestry
Coal oil gas
Oth minerals
Beef
Poultry, etc.
Vegetable oils
Dairy
Rice products
Sugar
Other foods
Beverages, tobacco
Textiles
Clothing
Leather products
Forestry products
Paper products
Petroleum products
Chem plast rubber
Mineral products
Iron steel
Non-ferrous metal
Metal products
Vehicles
Other transport
Electrical machinery
Machinery, etc.
Other manufactures
Initial tariffs (percent)
Rest of
Africa
EU
US
5.0
0.0
0.0
5.0
0.0
2.3
20.0
1.6
0.6
15.4
0.0
0.0
5.0
0.0
2.0
20.7
0.0
0.1
11.9
0.0
0.0
12.4
0.0
0.0
10.0
0.0
0.0
10.8
0.0
0.0
2.3
0.0
0.0
11.3
0.0
0.1
0.0
81.6
0.0
10.0
0.0
0.0
16.7
0.2
0.2
5.3
26.8
11.1
9.9
0.0
0.0
21.9
0.0
0.0
19.2
0.0
0.2
20.6
0.9
7.7
18.9
0.0
0.0
20.8
0.0
0.0
17.8
0.0
0.1
14.8
0.0
0.4
12.7
0.0
0.1
11.4
0.0
1.2
14.5
0.0
1.1
18.7
0.1
1.5
14.0
0.0
0.0
11.6
0.0
0.2
17.7
0.0
0.9
11.4
0.0
0.0
12.7
0.0
0.0
9.0
0.0
0.6
8.3
0.0
0.9
28.4
0.0
0.3
Rest of
World
0.9
26.2
17.3
11.2
1.0
3.3
1.7
1.1
4.2
4.1
2.6
1.7
12.5
2.2
7.2
15.9
1.7
2.5
6.6
20.9
9.3
12.8
5.1
5.4
3.0
4.8
6.2
11.4
7.6
3.6
6.6
6.5
0.8
0.7
5.9
0.9
Tariff changes (percentage
points)
Rest
Rest of
Africa EU
World
US
0
0
0
0
0
0 1.05
3.66
0
0.1 0.16
2.03
0.01
0
0
0
0
0
0
0.24
2.41
0 0.03
0.01
0
0
0
0
0.01
0
0
0.04
0
0
0
0.2
0.37
0 0.01
0.11
0.01
0
0
0.02
0
0 0.05
0.04
0
0
0
2.29
0.05
0.02
0
0.16
0
0.1 0.11
1.25
0
12.02 4.34
0.9
0
0
0
0.01
0
0
0
0.01
0
0.02 0.09
0.16
0.01
0.5 0.13
1.78
0.01
0
0
0.89
0
0
0
4.01
0.01
0 0.02
0.13
0.31
0 0.12
0.37
0
0
0
0.13
0.28
0
0
0.67
0.01
0 0.59
1.16
0.01
0.04 0.35
1.46
0
0
0
1.49
0
0 0.02
0
0.03
0
0
1.39
0
0
0
0.67
0
0
0
0.05
0
0
0
0.09
0.08
0 0.18
0.86
0.04
0 0.13
0.06
Source: GTAP results – see footnote for the previous table.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
A
s
y
m
p
t
o
t
e
Real wage
Labour force
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.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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.
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
th
A review of the results of the 6 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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
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
Trade Policy options for Nigeria: a GTAP simulation analysis
WP10/2007 tralac | December 2007
47
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
WP10/2007 tralac | December 2007