An Examination of Morocco's Trade Options with the EU

Abstract

As a moderate North African Arab state, Morocco has ratified preferential free trade agreements with both the EU and the USA. However, the potential importance of improved agro-food market access with the EU has been largely ignored in Morocco-EU Association Agreement (MEAA). Indeed, in comparison with the depth of the agro-food reforms in the Morroco-US agreement, the MEAA is largely incomplete. Accordingly, as a first objective we employ a modified computable general equilibrium (CGE) model to assess the potential for further long run trade and growth in Morocco through agro-food tariff abolition. Moreover, we investigate whether there is an economic incentive for such an EU countermovement to restore competitive parity with the US. As a further aim, we examine the trade inhibiting implications of non-tariff barrier (NTB) trade costs (e.g., red tape, licensing laws etc.), which have hitherto largely escaped reform. Thus, we estimate NTB trade cost tariff equivalents (TEs) employing a theoretically consistent gravity specification. TEs are implemented into our CGE model to measure the trade and growth impacts from NTB removal in agro-food and across all Moroccan-EU trade. Whilst agro-food liberalisation yields disappointing results for Morocco, the potential for development led policies through elimination of NTBs is highly appealing.