EU-Rep. of South Africa FTA: extensions to baseline GTAP Short Course Purdue University 4 August 2006

Motivation for baseline Important question in trade policy discussions: How significant are the ‘unintended’ impacts of PTAs on third parties, especially when that third party has a PTA with one of the parties entering the new agreement?

Baseline scenario: schematic EU South Africa Botswana Import Quota on Meat Bilateral liberalization (0-100%) Internal free trade, CET, tariff sharing Namibia Lesotho Swaziland

Baseline: key results

Extensions to baseline 1.Rainer and John - The Botswana meat story: quotas, tariffs and all that jazz 2.Jonathan and David – Including Botswana in the EU-SACU FTA 3.Birgit and Idrissa - Partial liberalization of dairy and sugar in the EU 4.Mitsu and Amal - Impact of productivity improvements in Botswana’s ag sector

The BWA Meat Story EU South Africa Botswana BWA Import Quota on Meat liberalization (0-100%) Lesotho Namibia Swaziland Internal free trade, CET, tariff sharing

The BWA Meat Story EU Botswana BWA Remove Quota on Meat liberalization (0-100%) ??? Should BWA be concerned about the meat quota agreement with EU ? South Africa Lesotho Namibia Swaziland Internal free trade, CET, tariff sharing

Removing quota constraint on meat for BWA Closure file changes ! ORG; ! Fix Qty and price of BWA exports of meats to EU; swap qxs("meat","bwa","eur") = rxs("meat","bwa","eur"); ! Remove restriction; ! swap qxs("meat","bwa","eur") = rxs("meat","bwa","eur"); Expansion on exports: + 7% Why didn’t BWA exports of meat to EU go up more strongly ?

1.No competitive price in BWA compared to other regions 2.Trade is still constrained by (high) EU tariffs 3.Limited capacity to expand the meat processing sector Tariffs (meat to EU) : 87% (BWA), 80% (SA-region) ! Full Liberalisation on MEAT BWA to EU; (using target rate); Shock tms("meat","bwa","eur") = ;

Results : Exports

Results : Welfare