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176 CHAPTER 7


each Maghreb country and the United States; (4) multilateral liberalization among the Maghreb countries, the E.U., and the United States; and (5) global trade liberalization. The dynamic model was used to consider the impact of multilateral liberalization among the Maghreb countries, the E.U., and the United States (Simulation 4), with and without three additional measures: liberalization of services, trade facilitation, and increased domestic invest- ment. More information on the methods used in this analysis is available from Thomas et al. (2008).


Results


The results of the trade liberalization simulation using the static version of the MIRAGE model are shown in Table 7.1. The first simulation shows the impact of an AMU, which would eliminate tariff restrictions among Algeria, Libya, Mauritania, Morocco, and Tunisia. This “south–south” trade liberaliza- tion would have only a very modest impact on Morocco, increasing exports by 0.5 percent, but would have a negligible effect on the terms of trade, national income, and returns to labor. The explanation is that the North African economies have a relatively similar structure, so there would be few gains from liberalizing trade among them.


On the other hand, bilateral FTAs between each of the Maghreb countries and the E.U. would have a significant impact on Moroccan exports, boosting them by 37.5 percent. Moroccan exports would gain from this type of trade liberalization because the E.U. currently maintains high tariffs on fruits, veg- etables, oilseeds, and vegetable oils (particularly olive oil). Although exports


Table 7.1 Estimated impact of trade liberalization in Morocco using the static MIRAGE model (percent change)


Returns to unskilled


Trade scenario


Arab Maghreb Union EU25-Maghreb bilateral FTAs


U.S.-Maghreb bilateral FTAs


U.S.-EU25-Maghreb FTA Full trade liberalization


Total Terms National labor in exports of trade income agriculture


0.5 37.5 4.8


39.8 47.8


0.0 –5.9 –0.6 –6.1 0.0 –0.3 –0.3 –0.1 –8.1 0.8


Returns to unskilled labor in


sectors


–0.0 0.1 –1.1


–6.4 Returns


other to skilled labor


0.1 –0.2 0.0 –0.2 2.3


–6.6 0.1 –8.3 0.5


2.5 5.7


Source: Thomas et al. (2008). Notes: EU25, European Union (25 members as of 2004); FTA, Free Trade Agreement; U.S., United States.


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