Revenue and Welfare Consideration to Help the EAC Conclude a Full EPA with the EU

At the end of the Cotonou Partnership Agreement, its members agreed to put in place a WTO-compatible free trade area. WTO-compatibility implies that 90% of the bilateral trade between the European Union (EU) and the Africa-Caribbean-Pacific (ACP) countries would have to be duty free and quota free within a reasonable (unspecified) period (e.g., 80% duty-free for ACP partners and 100% for the EU). The East African Community (EAC) negotiating group is in the process of finalizing its Economic Partnership Agreement (EPA) with the EU. The EU accounts for around 15% of Rwanda’s and for 14% of Uganda’s imports, and the share of the EU import in tariff revenue is around 14% for these two countries. This paper explores the effects of an EPA on Rwanda’s revenues, benefits to consumers and producers, net welfare effects and probable dynamic benefits.

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