64 CHAPTER 3


most heavily on livestock production, which would be the best-protected sector initially. Agricultural wages would decline 14 percent if agricultural labor could not switch to nonagricultural activities. The authors assume that if labor could move among sectors, agricultural wages would decline by only 6 percent. Upgrading the skill level of the rural labor force by assuming some productivity increase would result in higher unskilled wage rates, thus ben- efiting the poor.


Lofgren, El-Said, and Robinson (1999) used a dynamically recursive gen- eral equilibrium model for Morocco to examine options for unilateral trade liberalization that would go beyond the terms of the EMAA. The results from unilateral trade liberalization scenarios beyond the implementation of the EMAA indicate that tariff unification (tariffs ranging between 3 and 98 per- cent set at 29 percent across sectors) would have small aggregate effects, while the removal of NTBs would have positive aggregate effects but favor skilled labor and capital. On average, real household income per capita would expand but in favor of urban households and nonpoor households in rural areas. Combining trade liberalization with at least one complementary domestic policy would result in a win-win outcome whereby the welfare of all household groups would increase much more rapidly than if status quo policies were followed.11


A third study of Morocco combined a CGE model with household survey data to obtain a detailed picture of the distributional effect of unilateral trade liberalization. Ravallion and Lokshin (2004) measured the short-term welfare impacts of the price changes attributed to removing the country’s protection on cereals (they estimated cereal protection at 100 percent during 1997–98).12 The price changes were estimated from a CGE model simulating various levels of tariff reduction (10, 30, 50, and 100 percent) for cereals and the removal of the government intervention in subsidizing cereal prices among consumers. Prices in cereals would decrease by nearly 27 percent for consumers and by around 24 percent for producers. Producer prices for fresh vegetables would also decrease, by less than 10 percent, while the prices of other agricultural products (fruits, dairy products and eggs, meat, and sugar) would decrease at the lower levels of tariff reductions on imported cereals but increase at the higher levels. In aggregate, the results show that there


11 Complementary policies include (1) transfers to owners of rainfed agricultural resources (land and pasture), in each period fully compensating for losses from trade liberalization, and (2) aug- mentation of the stock of rural skilled labor by 5 percent in each period, with additional labor


coming from the unskilled labor of rural households. 12 The MFN tariff on cereals reported in WTO (2003) is 20.6 percent (simple average) with a range of 2.5–53.5 percent.


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