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The Impact of the Eu‐Sa Free Trade Agreement on Selected Comesa Countries
Author(s) -
Thurlow J,
Holden Merle
Publication year - 2002
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2002.tb01292.x
Subject(s) - citation , library science , schools of economic thought , sociology , political science , media studies , law , economics , computer science , neoclassical economics
Following the recent free trade agreement (FTA) between the European Union and South Africa, definite concern has arisen amongst the countries within the Common Market for Eastern and Southern Africa (COMESA) as to the impact of this FTA on their exports into these two markets. This paper aims to determine the extent to which the concerns of COMESA are founded and whether the EU-SA FTA will indeed result in significant trade diversion. This is done using non-linear partial equilibrium analysis under the assumption of imperfect substitution between imported and domestic goods. It is found that the FTA appears to have little impact on COMESA exports into either of the two markets. This is due largely to COMESA exports not being in competition with those of the European Union and South Africa, and the pre-existing high margins of preference granted to COMESA countries. Finally, recommendations are provided concerning the use of partial equilibrium modelling in the South African context.