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Economic & Sector Work :: Policy Note

Benefits of the ECOWAS CET and EPA Will Outweigh Costs in Nigeria, but Competitiveness is the Real Issue

ADJUSTMENT ASSISTANCE AGRICULTURAL PRODUCTS APPAREL AVERAGE TARIFF AVERAGE TARIFFS BARRIERS TO TRADE CAPITAL GOODS CIVIL SOCIETY COMMON MARKET COMPREHENSIVE DEVELOPMENT CONSUMER PRICES CONSUMERS CUSTOMS CUSTOMS DUTIES CUSTOMS DUTY CUSTOMS OFFICIALS CUSTOMS UNION DEVELOPING COUNTRIES DOMESTIC INDUSTRIES DOMESTIC PRICE DOMESTIC PRICES DOMESTIC PRODUCERS DOMESTIC PRODUCTION DOMESTIC TAX SYSTEM DURABLE ECONOMIC DEVELOPMENT ECONOMIC INTEGRATION ECONOMIC STRUCTURES EQUILIBRIUM EUROPEAN UNION EXCISE DUTIES EXPORT COMPETITIVENESS EXPORTERS EXPORTS EXTERNAL TARIFF EXTRAORDINARY SESSION GLOBAL ECONOMY GLOBAL MARKETS GLOBAL TRADE GOVERNMENT REVENUE HIGH TARIFFS HOUSEHOLD INCOME IMPACT OF TRADE IMPACT OF TRADE LIBERALIZATION IMPORT BANS INCOME GROUPS INCOME LEVELS INFANT INDUSTRIES INTERNATIONAL COMPETITION INTERNATIONAL TRADE INTRAREGIONAL TRADE LDCS LEVIES LEVY LOW TARIFFS MACROECONOMICS NON-TARIFF BARRIERS OPEN TRADE OPEN TRADE REGIME POLICY MAKERS POLICY RESEARCH POLICY RESPONSES POLITICAL ECONOMY POLITICAL NEGOTIATIONS PREFERENTIAL AGREEMENTS PREFERENTIAL MARGIN PREFERENTIAL MARKET ACCESS PRICE CHANGE PRICE CHANGES PRICE OF IMPORTS PRODUCTIVITY GROWTH PROFITABILITY PROTECTION MEASURES RECIPROCITY REGIONAL GROUPINGS REGIONAL INTEGRATION REGIONAL TRADE RENEGOTIATIONS RULES OF ORIGIN SIDE EFFECTS TARIFF BARRIERS TARIFF LEVELS TARIFF LINES TARIFF PROTECTION TARIFF RATE TARIFF REDUCTION TARIFF REDUCTIONS TARIFF REFORM TARIFF REVENUE TARIFF REVENUES TARIFF STRUCTURE TAX TAX RATE TAXATION TECHNICAL ASSISTANCE TERMS OF TRADE TOTAL REVENUE TRADE AGREEMENT TRADE AGREEMENTS TRADE CHANNELS TRADE COMPETITIVENESS TRADE DIVERSION TRADE FACILITATION TRADE FLOWS TRADE INTEGRATION TRADE LIBERALIZATION TRADE MODEL TRADE POLICY TRADE POLICY AGENDA TRADE POLICY ANALYSIS TRADE POLICY ENVIRONMENT TRADE POLICY REFORMS TRADE POLICY REVIEW TRADE PREFERENCES TRADE PROTECTION TRADE REFORMS TRADE REGIME TRANSPORT COSTS TREATY WORLD TRADE WORLD TRADE ORGANIZATION WTO ZERO TARIFFS
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World Bank, Washington, DC
Africa | Nigeria
2015-01-20T23:25:38Z | 2015-01-20T23:25:38Z | 2015-01

This note analyzes the benefits of ECOWAS Common External Tariff (CET) and Economic Partnership Agreement (EPA) will outweigh costs in Nigeria, but competitiveness is the real issue. After decade-long negotiations, the ECOWAS CET and EPA with the EU recently reached decisive milestones. These major reforms should have significant impacts and offer new opportunities to West Africa, but have so far failed to garner a broad consensus, notably in Nigeria. The lack of objective and easily accessible assessments of their likely effects appears to be partly responsible for this situation. Two recent World Bank studies use a simple methodology to assess the potential impact of these reforms on Nigeria. Overall, full implementation of the CET and EPA in Nigeria would result in limited fiscal losses, marginal welfare gains for consumers and higher profits for a majority of manufacturing firms accounting for the majority of jobs in this sector. Almost all firms experiencing negative effects exhibit higher-than-average profitability before the reforms and most would remain profitable after them. The predicted magnitude of both the CET and EPA is small compared to gains that could be achieved by tackling supply-side constraints faced by Nigerian firms. Combining trade policy reforms with an ambitious competitiveness agenda that addresses the most binding constraints and promotes regional trade appears as the best way to maximize the benefits and minimize the potential cost of these reforms.

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