Browsing by Author "Oluwusi, Oluwadamilola Oluwatemilorun"
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- ItemThe Impact of Regional Integration on Nigeria’s Imports: A Case of ECOWAS Common External Tariff on Agro-Processing(Stellenbosch : Stellenbosch University, 2016-12) Oluwusi, Oluwadamilola Oluwatemilorun; Punt, Cecilia; Stellenbosch University. Faculty of AgriSciences. Agricultural Economics.ENGLISH SUMMARY : There has been several attempts to foster deep integration within West Africa in times past. Regional integration has notable gains and is vital for any economy. It promotes trade and contributes to growth. Consequently, the Economic Community of West African States (ECOWAS) customs union agreed on a Common External Tariff (CET), which Nigeria started to implement on 11th April 2015. The study particularly looks at the impact of the ECOWAS regional trade agreement on trade and agro-processing in Nigeria. Specifically, the impact of the CET on imports of agroprocessed products was quantified. In view of further liberalization, the effect of a possible ECOWAS-European Union (EU) Economic Partnership Agreement (EPA) on trade, revenue and welfare was also examined. The methodology used for analysis is a partial equilibrium model. Specifically, the Single Market Partial Equilibrium Modelling Tool (SMART) is used at a fairly disaggregated six-digit level of the harmonized system. The analysis makes use of 2014 trade data obtained from the SMART model and the ECOWAS CET schedule obtained from Nigeria Customs Service (NCS). The study defined four tariff liberalization scenarios. The first is a common external tariff on all products imported by Nigeria from ECOWAS. The second scenario takes into consideration a zero-rating on ECOWAS imports of all products. The third scenario considers a complete elimination of existing import tariffs on all members of the EU in addition to ECOWAS partners in the context of an ECOWAS-EU EPA. The fourth scenario imposes the common external tariffs on imports from all trading partners, except ECOWAS and the EU, whose products remain zero rated. Overall, the results indicate that a regional trade agreement with ECOWAS and the EU increases the imports of agro-processed products by Nigeria. This import growth is mostly driven by trade creation as a result of the lowering and/or the removal of tariffs. Cote d’Ivoire had the largest positive trade diversion effects among the ECOWAS partners and as for the European Union it was the Netherlands. Nigerian consumers benefit from reduced prices, but the influx of new imports may not favour producers in the agro-processing sector. This is because expensive local production is substituted by cheaper imports. Though not analyzed in this study, producers within the agro-processing sector may likely witness an impact of diminishing profits because of strong import competition. The analysis also indicates loss of tariff revenue for the Nigerian government but welfare gain in total, as expected. In the first scenario (CET on ECOWAS only) agro-processing accounted for the largest share (60.83%) of tariff revenue loss for Nigeria. Based on the results, agro-processing accounts for 33.83%, 30.01%, 7.35% and 5.17% of the trade creation across the four scenarios as well as some trade diversion 55.82%, 32.81%, 14.91% and 11.88%. The implementation of Free Trade Area (FTA) within ECOWAS serves as a meaningful base provided trade policies are well coordinated and harmonized. The government however needs to come up with measures to enable producers of less competitive agro-processing sectors to remain relevant. The results show that Nigeria needs an approach to generate revenue to offset the tariff revenue losses caused by the implementation of the CET.