Regional Integration and the WTO Agreements:

Beschreibung

Sudan’s economy is based largely on agriculture which accounts for 46% of Gross Domestic Product (GDP). Trade policy changes are underway, which are undertaken mainly in response to the accession of Sudan to the COMESA and the current WTO negotiations. Consequently, the ongoing trade liberalization policies, which include the removal of import tariffs and export taxes, would have profound impacts on agricultural production, consumption, trade and welfare in Sudan. Thus, this piece of research focuses on modeling the effects of regional economic integration on Sudan’s agricultural trade flows and welfare in the context of the WTO Agreements. A country-linked trade flow simulation model that implements national product differentiation - the Armington approach - is developed to assess the impact of preferential trade liberalization on Sudan’s agricultural trade flows and welfare. On the demand side, the simulation model distinguishes between domestically produced and imported products from different countries of origin, which are imperfect substitutes. On the supply side, it distinguishes between domestically marketed products and exports to different destinations, which are imperfect transforms. The effects of trade liberalization are simulated by developing three alternative trade policy scenarios depicting liberalization on a preferential basis, formation of a customs union and liberalization on a most-favored-nation (MFN) basis. The quantitative results of preferential trade liberalization reveal a large expansion of intrabloc trade resulting from the removal of intra-COMESA trade barriers. The simulation results indicate that Sudan is trade diverting on a net basis due to the replacement of cheaper imports from non-COMESA countries by more expensive imports from COMESA members. However, trade creation also occurs resulting from the substitution of the domestic production by imports from the rest of the COMESA. Overall economic welfare increases under both preferential and nondiscriminatory trade liberalization scenarios.

Autor*in

Kamal Elmahdi

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Agrarpolitik Agricultural trade COMESA Welfare

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