#political economy of ad-hoc tariff changes
GAMS multimarket model simulating rice trade trade in EAC, adapted from J. Peerlings (2023)
Used in my thesis to analyse the functioning of the Eest African customs unions diversions from the stay of tarrif, acension of the DRC to the customs union and simulation of lower tarif.
Abstract
This paper evaluates the welfare implications of trade policies within the East African Customs Union, with a specific focus on its rice tariffs and the sensitive item list. The study examines the historical context of the East African Union, tracing its development and the establishment of the Customs Union. It analyzes the functioning of the common market, particularly in relation to rice tariffs, and explores the drivers behind deviations from the agreed-upon tariff structure. Using a multimarket model scenario’s where run which quantified the potential effects on consumer welfare, producer benefits, and government revenue. The findings indicate that while producers and government revenue may benefit from the high common external tariff, consumer welfare experiences a significant reduction, leading to an overall negative change in welfare. The paper argues for a comprehensive evaluation of trade policies beyond the prevailing discourse centered between rent-seeking and trade liberalization. The evaluation needs to consider the welfare implications for all stakeholders, including the most vulnerable members of society. Based on the findings, the paper recommends a reevaluation of the import tariff on rice to mitigate the negative welfare effects. It underscores the importance of evidence-based and inclusive approaches to foster sustainable development and inclusive growth within the East African Customs Union, also taking into account the case of the ascension of the Democratic Republic of Congo to the customs union.