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

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Coste, Antoine
von Uexkull, Erik
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.
Coste, Antoine; von Uexkull, Erik. 2015. Benefits of the ECOWAS CET and EPA Will Outweigh Costs in Nigeria, but Competitiveness is the Real Issue. Africa trade policy notes;no. 43. © World Bank, Washington, DC. License: CC BY 3.0 IGO.
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