Abstract
Botswana along with its Southern African Customs Union (SACU) states is negotiating a European Union (SACU-EU) Economic Partnership Agreement (EPA). The negotiations are contentious both within SACU and against the EU and not surprisingly, the initia l 2007 deadline not met. This study investigates th e effects of such an agreement on Botswana’s import of food, beverages and tobacco using the Vinerian partial equilibrium method. The authors attempt to quantify the impacts of a reciprocal duty and quota free EP A on Botswana’s imports of food, beverages and tobacco under SACU-EU EPA’s. The partial equilibrium analysis suggests that a net welfare benefit for th e Botswana consumers is possible. Although there ar e some trade diversion and tariff revenue losses thes e do not appear to be large enough to negate the ef fects of the welfare enhancing trade creation.
Highlights
Botswana is involved in a trade liberation agreementBotswana, Lesotho and Swaziland have initiated the Southern African Customs Union (SACU)-EU Economic Partnership Agreement (EPA) negotiations by signing an interim EPA; but Namibia is rather critical of the impacts while South with the European Union (EU)
EU imports into Botswana increases by 796% from the initial EU imports of Botswana’s revenue. Should the Pula (BWP) 36.95 million. This high increase is dueto trade creation as relatively inefficient SACU imports are substituted by efficient EU imports and some of the trade is diverted from tariff paying Rest of the World (ROW) totariff non-paying EU
The higher percentage of trade creation shows the trade inhibitioneffect of SACU’s import tariff duty on EU producers. This is because with a tariffduty on EU imports into Botswana, only 1% of food, beverages andtobacco is imported from EU, 3% from ROW and a substantial 95% isfrom within SACU states
Summary
Lesotho and Swaziland have initiated the SACU-EU EPA negotiations by signing an interim EPA; but Namibia is rather critical of the impacts while South with the European Union (EU). Botswana belongs Africa already has a trade arrangement with the EU to the Southern African Customs Union (SACU) and Trade, Development and Cooperation Agreement together with other members is involved in negotiations (TDCA). The SACU-EU EPA negotiations are proving with the European Union members to liberalise trade contentious and is taking somewhat longer than between the two groups. If successful, such an expected, given the initial deadline was December 2007 arrangement will have significant implications for the (Meyn, 2004b). Botswana is dependent on the South African (a member of SACU)
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