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178 CHAPTER 7


Table 7.2 Trade liberalization scenarios under the dynamic version of MIRAGE Trade scenario


EU25 and U.S. (2009–13)


Base: The U.S.-EU25-Maghreb FTA 2009–13: Eliminate all tariffs on imports on goods


Liberalization of services Trade facilitation


2009–13: Reduce by 50% the export tax on services


No change


Increased domestic investment in No change Maghreb countries


Maghreb countries (2009–18) 2009–18: Eliminate all tariffs 2009–18: Reduce by 50% the Reduce trade costs by 50%


on imports on goods export tax on services Increase the saving rate by 5%


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


import protection. According to these estimates, Morocco has implicit rates of protection of over 80 percent in construction and around 50 percent in business services and in trade and transportation. Although the restrictions on services are imposed by importing countries, they do not generate tariff rev- enue. They act as export taxes on services in the exporting countries, where they reduce the number of firms. Reducing or eliminating these export taxes is expected to have pro-competitive effects on exporting firms, increasing their numbers, decreasing their profits, and decreasing the price of imported services (Thomas et al. 2008). The liberalization of trade in services was simulated by assuming that the rates of protection (export tax in exporting countries) would be cut by 50 percent. As shown in Table 7.3, the liberaliza- tion of services would further increase the expansion in exports associated with the U.S.-E.U.-Maghreb regional FTA. The terms of trade would remain somewhat negative with or without liberalization in services, but the change in national income would switch from –0.2 with the regional FTA to +0.2 with the regional FTA and liberalization in services. These gains would be associ- ated with increased efficiency as the high rates of protection on services were brought down. However, the effect on the returns to unskilled agricultural labor would remain negative. Presumably, small-scale farmers are not major consumers of the types of services that are heavily protected in Morocco and thus would not benefit from their liberalization.


Trade facilitation refers to measures that increase the speed and effi- ciency of the administrative procedures associated with moving goods into and out of the country, particularly processing goods through customs. Previ- ous studies suggest that trade facilitation costs in developing countries are 5 percent of the value of trade in industrial goods and 7.5 percent of the value of trade in agro-food products (see Thomas et al. 2008). The simulation assumed that measures to improve trade facilitation could cut these costs by


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