The EU-CARIFORUM Economic Partnership Agreement (EPA). An assessment of the static welfare impacts on Guyana
| Pages | 272-284 |
| DOI | https://doi.org/10.1108/WJEMSD-01-2013-0001 |
| Published date | 21 October 2013 |
| Date | 21 October 2013 |
| Author | Louis Dodson |
| Subject Matter | Strategy,Business ethics,Sustainability |
The EU-CARIFORUM Economic
Partnership Agreement (EPA)
An assessment of the static welfare impacts
on Guyana
Louis Dodson
Department of Government and International Affairs, University of Guyana,
Georgetown, Guyana
Abstract
Purpose – The entry into force of the EU-CARIFORUM Economic Partnership Ag reement (EPA)
marks the beginning of a new era of trade relations, from preferential treatment to reciprocity,between
the member states of the European Union (EU) and the Caribbean Forum (CARIFORUM) of African,
Caribbean and Pacific (ACP) states. In light of the controversy regarding the impact of the agreement,
an assessment is made on the static welfare impact it is likely to generate on consumers in Guyana.
Design/methodology/approach – The assessment is done through the application of a partial
equilibrium model to the 2008 import and tariff data of Guyana. The model captures the static welfare
effect that will be occasioned by a change in tariff on imports.
Findings – The study finds that there will be a static net welfare loss to the tune of US$31.01 million
or 2.2 percent of Guyana’s GDP obtained for 2008. The loss is due to a large trade diversion effect
which is the product of the fact that over the years Guyana imported little from the EU relative to the
rest of the world minus CARIFORUM sources.
Originality/value – Unlike its forerunner, the import data used in this study is for the year
immediately before the entering into force of theEU-CARIFORUM EPA and reflects the exact amount
of imports that will be liberalized by Guyana. In addition, the study is broader in scope as it focusses
on the EU-27, which is the exact number of EU member states with whom Guyana has signed the
aforementioned agreement. Subject to its exactness, the study is better positioned in having its
findings be used as a yardstick, given the periodic mandator y review of the EU-CARIFORUM EPA.
Keywords European Union, CARIFORUM, Economic Partnership Agreement, Static welfare,
Trade creation, Trade diversion
Paper type Research paper
1. Introduction
The October 2008 signing of an Economic Partnership Agreement (EPA) marked the
beginning of a new era of trade relations between the member states of the European
Union (EU)[1] and the Caribbean Forum (CARIFORUM) of African, Caribbean and
Pacific (ACP) states. Unlike its predecessors [Lome
´I (1975-1980), Lome
´II (1980-1985),
Lome
´III (1985-1990), Lome
´IV (1990-2000)], which saw the EU according to the ACP
group of states, discriminatory non-reciprocal access to its market, the EU-CARIFORUM
EPA mandates the granting of market access in a reciprocal manner. The departure is
said to have resulted from the 1996/97[2] successful challenge by the USA to the World
Trade Organization (WTO) that the preferences offered for the exporting of bananas
under the Lome
´Convention are incompatible with the rules of the WTO, and the view
that obtaining a waiver from the WTO for the renewal of the Lome
´Convention, which
was up for renewal in 2000, was uncertain (EU, 1996). Thus, the Lome
´Convention was
succeeded by the Cotonou Agreement (2000-2020), which obtained a waiver that
temporarilyextended the provisions of the Lome
´Convention up until December 31, 2007,
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2042-5961.htm
Received 2 January 2013
Revised 2 January 2013
Accepted 5 January 2013
World Journal of Entrepreneurship,
Management and Sustainable
Development
Vol. 9 No. 4, 2013
pp. 272-284
rEmeraldGroup PublishingLimited
2042-5961
DOI 10.1108/W JEMSD-01-2013-00 01
272
WJEMSD
9,4
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