Partial Equilibrium Analysis to Determine the Impacts of a Southern African Customs Union-European Union Economic Partnership Agreement on Botswana's Imports

Abstract

Botswana along with its Southern African Customs Union (SACU) states is negotiating a European Union (SACU-EU) Economic Partnership Agreement (EPA). The negotiations are contentious both within SACU and against the EU and not surprisingly, the initial 2007 deadline not met. This study investigates the effects of such an agreement on Botswana's import of food, beverages and tobacco using the Vinerian partial equilibrium method. The authors attempt to quantify the impacts of a reciprocal duty and quota free EPA on Botswana's imports of food, beverages and tobacco under SACU-EU EPA's. The partial equilibrium analysis suggests that a net welfare benefit for the Botswana consumers is possible. Although there are some trade diversion and tariff revenue losses these do not appear to be large enough to negate the effects of the welfare enhancing trade creation.