DP2299 Asymmetric Regionalism in Sub-Saharan Africa: Where Do We Stand?

Author(s): Olivier Cadot , Jaime de Melo , Marcelo Olarreaga

Publication Date: November 1999

Keyword(s): asymmetry , Comparative Advantage , Compensation , Regionalism

JEL(s): F11 , F13 , F15

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP2299.asp

The paper reviews the likely economic effects of the Regional Economic Partnership Agreements (REPAs) proposed by the EU to the ACP countries to succeed to the Lomé IV agreements. We argue that, in spite of some likely positive effects because of reciprocity and because of the North-South partnership, the pronounced asymmetries among the Southern partners will lead to strong redistributive and marginalization effects that will require compensations that are likely to be costly to implement. It is also pointed out that efforts at regional cooperation agreements would avoid some of the shortcomings associated with the proposed discriminatory trade preferences that would accompany the proposed REPAs. And if the REPAs are negotiated, they should be accompanied by compensatory transfers from the EU for tax revenues losses attributable to the agreements.