The process of trade liberalisation and market-oriented economic reforms was initiated in many developing countries in early 1980s; and it intensified in 1990s. In 1994, Cote d’Ivoire was assisted by the IMF to implement trade-policy reforms under Structural Adjustment Programme (SAP). After adopting SAP, the country witnessed soaring balance-of-payment problems, contraction of output, unemployment and the loss of government revenue. Several factors, which were at play resulted in dismal economic performance under SAP. In order to consolidate gains in competitiveness, and achieve high and sustainable growth, the Ivorian authorities coordinated efforts to establish and intra-regional custom tariffs among the member of the West African and Monetary Union (WAEMU), the Economic Community of West African States (ECOWAS), World Trade Organisation (WTO), Economic Partnership Agreements (EPAs) and bilateral agreements. It is against this background that this study is undertaken, in order to evaluate the impact of different trade-policy regimes on trade, welfare and revenue in Cote d’Ivoire. This study used one model: World Integrated Trade Solutions/Software for Market Analysis and Restrictions on Trade (WITS/SMART). The WITS/SMART model was used because of its ability in analysing the tariff effect of a single market on disaggregated product lines. The model also has the capability to analyse the effects of trade-policy reforms in the presence of imperfect substitutes. Using the WITS/SMART model, the study considered seven trade-liberalisation frameworks for Cote d’Ivoire: full implementation of the ECOWAS free trade agreement (FTA), ECOWAS common external tariff (CET), WAEMU CET, WAEMU FTA, EPAs, BFTAs and WTO FTA. The WITS/SMART model reveals that all trade liberalisation scenarios may cause welfare gains – due to the plummeting of prices. However, in all trade liberalisation scenarios, welfare gains were found to be is insignificant. In all cases, welfare gains fell far short of compensating for revenue loss. The impact of trade liberalisation on exports and imports was met with mixed reactions. For the WAEMU customs union and the ECOWAS customs union, and WTO FTA, trade reforms are likely to face serious balance-of-payment problems, as imports exceeded exports by significant margins. With respect to revenue loss, of all trading arrangements, the WTO FTA presents a serious challenge for Cote d’Ivoire revenue followed by BFTAs, ECOWAS FTA, EPAs, ECOWAS CET, WAEMU CET, and WAEMU FTA with anticipated revenue losses. Another challenge for Cote d’Ivoire is the presence of trade creation effects, which were observed in all trade reform scenarios. From this study, it appeared that WAEMU CET poses serious threats of trade creation followed by WTO FTA, BFTA, SADC FTA, COMESA CET, SADC CET, EPAs and WAEMU FTA. Specifically, the study highlighted that Cote d’Ivoire, on balance loses out on trade liberalisation, mainly from revenue loss and possible de-industrialisation from trade-creation effects. The study has also revealed that Cote d’Ivoire offers excessive tax exemptions, which worsens the fiscal position of the country in the face of trade liberalisation. Hence, based on the findings, this study recommends that Cote d’Ivoire needs to call for the design of a financial facility aimed at assisting industries affected by trade-creation effects. The country needs to consider improving the collection of revenue from alternative sources, such as VAT, excise duties, personal and company taxes and excise duty, in order to cushion itself against the revenue loss impact of trade reforms. Government could also consider widening the tax base, by taxing the informal sector, which has been growing rapidly in the past years. In addition, policies aimed at exports promotion, such as export subsidies, trade finance and the strengthening of trade-promotion organisations should be considered. The outcome of this study provides a wake-up call to developing countries engaged in the WTO negotiations and other regional trading arrangements.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:nmmu/vital:28373 |
| Date | January 2017 |
| Creators | Guei, Kore Marc Antoine |
| Publisher | Nelson Mandela University, Faculty of Business and Economic Sciences |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis, Doctoral, DPhil |
| Format | xxi, 336 leaves, pdf |
| Rights | Nelson Mandela University |
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