Abstract
The objective of this paper is to use a set of varied scenarios related to the Economic Partnership Agreement (EPA) and the loss of European Union (EU) sugar preferences (in the form of partial and full price liberalization) in combination with the recently committed EU development aid to examine the impact on Fiji using a dynamic computable general equilibrium model. It is shown that without aid, the loss of sugar preferences has devastating impact on real output, exports, rural employment, and other macroeconomic indicators. Without aid, the EPA scenarios, on the other hand, lead to some growth in real output but depress rural employment and non-sugar agricultural exports. Although improvements are observed across the scenarios with aid, it is argued that aid would be more effective if it directly addresses the supply-side constraints in Fiji instead of focusing on the sugar sector. (JEL C68, D58, F17, O56)
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