Delivering on Promises? The Expected Impacts and Implementation Challenges of the Economic Partnership Agreements between the European Union and Africa

Abstract

Abstract Economic partnership agreements (EPAs) mark a new era in economic relations between the European Union and African, Caribbean and Pacific (ACP) countries that will lead to reciprocal tariff liberalization. Model‐based impact assessments have become a powerful tool in trade negotiations and mixed results are reported for ACP countries. Given their set‐up within a neoclassical framework, these models neglect important issues such as impacts on employment, macroeconomic balances and adjustment costs. The structuralist computable general equilibrium model applied in this article for three African EPA regions addresses these shortcomings and shows negative macroeconomic and distributional effects and important adjustment costs associated with employment and public revenue losses. These results highlight the importance of policy responses to deliver on promises associated with EPAs, namely sustainable economic development. More generally, they show the importance of alternative models to understand implementation challenges and facilitate broader debates about bilateral trade agreements.

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