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54 CHAPTER 3


Estimations of global trade liberalization on the welfare of MENA coun- tries are found in Bouët, Mevel, and Orden (2006). The authors use the global CGE model MIRAGE to compare different partial liberalization scenarios of the Doha Round to a full trade liberalization scenario.6 The study covers 41 regions (including Morocco, Tunisia, and the rest of the MENA region) and 18 sectors, including agricultural sectors (including wheat, rice, sugar, meat, dairy products, and cotton) and manufacturing (textiles and wearing apparel). These sectors are of particular importance to the MENA countries and also represent highly protected commodities (see Chapter 2). Among middle- income countries, Tunisia would gain the most from the partial liberalization scenario, and the gains would be larger the more ambitious the scenario resulting from strong efficiency gains that offset the negative terms-of-trade effect. Full trade liberalization would be better for Tunisia than the less ambitious scenario but not as good as the most ambitious. Morocco would benefit more from partial trade liberalization, where the terms-of-trade losses are offset by efficiency gains, than from full trade liberalization, where they are not.


Full trade liberalization implies larger increases in world agricultural prices, and of course the complete erosion of preferences, than in the ambi- tious partial liberalization scenario. Current beneficiaries of trade prefer- ences, such as the North African countries in MENA, and agricultural net importers may incur less gain in efficiency but also smaller losses in the terms of trade under partial liberalization than under full trade liberalization. For a net agricultural exporter like Turkey, better market access will unambigu- ously generate more gains.


Tokarick (2005) uses a partial equilibrium model of 10 agricultural com- modities to simulate the effect of trade liberalization. In this model, full trade liberalization would raise world agricultural prices by 2–23 percent. By applying these price increases to agricultural trade patterns, Tokarick esti- mates the increase in agricultural import costs for each developing country. The cost of agricultural imports would increase US$4 million–US$10 million for most MENA countries. The exception is Djibouti, for which agricultural import costs would decline because of higher prices for its exports.


6 The Doha Round scenarios are partial liberalization scenarios and call for the elimination of export subsidies; in addition, the more ambitious scenario includes a 20 percent cut in domes- tic supports, sharper reductions in agricultural tariffs, caps on agricultural tariffs, and fewer exemptions (for sensitive and special products). The study uses the dynamic version of the MIRAGE model and runs the experiment over a 15-year period, from 2005 to 2020. A detailed presentation of the model and the corresponding assumptions is included in Bouët, Mevel, and Orden (2006).


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