Empirical analysis of tariff- line level trade, tariff revenue and welfare effects of reciprocity under EPAs with the EU : evidence from Malawi and Tanzania

Abstract

This paper provides a comprehensive quantitative analysis of the comparative effects of full and less than full reciprocity under an EU-ACP Economic Partnership Agreement for Malawi and Tanzania. The paper applies a partial equilibrium model to recent trade and elasticity’s data to measure the effects. We find that reciprocity will have welfare-enhancing consumption and trade creation effects but these will be overshadowed by strong welfare-lowering trade diversion and tariff revenue losses leading to non-negligible net welfare losses.