The EU-CARIFORUM Economic Partnership Agreement (EPA) An assessment of the static welfare impacts on Guyana, Louis Dodson
Department of Government and International Affairs
University of Guyana, Georgetown
Purpose: The entry into force of the EU-CARIFORUM Economic Partnership Agreement (EPA) marks the beginning of a new era of trade relations, from preferential treatment to reciprocity, between the member states of the European Union (EU) and the Caribbean Forum (CARIFORUM) of African, Caribbean and Pacific (ACP) states. In light of the controversy regarding the impact of the agreement, an assessment is made on the static welfare impact it is likely to generate on consumers in Guyana.
Design/methodology/approach: The assessment is done through the application of a partial equilibrium model to the 2008 import and tariff data of Guyana. The model captures the static welfare effect that will be occasioned by a change in tariff on imports.
Findings: The study finds that there will be a static net welfare loss to the tune of US$31.01 million or 2.2 percent of Guyana's GDP obtained for 2008. The loss is due to a large trade diversion effect which is the product of the fact that over the years Guyana imported little from the EU relative to the rest of the world minus CARIFORUM sources.
Originality/value: Unlike its forerunner, the import data used in this study is for the year immediately before the entering into force of the EU-CARIFORUM EPA and reflects the exact amount of imports that will be liberalized by Guyana. In addition, the study is broader in scope as it focusses on the EU-27, which is the exact number of EU member states with whom Guyana has signed the aforementioned agreement. Subject to its exactness, the study is better positioned in having its findings be used as a yardstick, given the periodic mandatory review of the EU-CARIFORUM EPA.
Keywords: European Union; CARIFORUM; Economic Partnership Agreement; Static welfare; Trade creation; Trade diversion.
Citation: Dodson, L. (2013), "The EU-CARIFORUM Economic Partnership Agreement (EPA): An assessment of the static welfare impacts on Guyana", World Journal of Entrepreneurship, Management and Sustainable Development, Vol. 9 No. 4, pp. 272-284. https://doi.org/10.1108/WJEMSD-01-2013-0001