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Measuring the Economic Impact of an EU–GCC Free Trade Agreement. CEPS Working Documents No. 206, 1 July 2004

DeRosa, Dean A. and Kernohan, David. (2004) Measuring the Economic Impact of an EU–GCC Free Trade Agreement. CEPS Working Documents No. 206, 1 July 2004. [Working Paper]

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    Abstract

    Economic growth rates in the Gulf region have languished in recent years and need to be raised to accommodate the rapidly growing populations and social aspirations of the region. Using a simple model of world trade, this report investigates the economic impacts of the new customs union of the Gulf Cooperation Council (GCC) and the proposed free trade agreement (FTA) between the GCC and European Union. The quantitative results suggest that the new customs union and proposed EU-GCC free trade agreement both appreciably expand trade and improve economic welfare in the GCC countries, with little significant economic impact on the EU. As expected, the FTA results in larger GCC economic gains than the customs union because it affords GCC consumers greater opportunity to enjoy imports at internationally competitive prices. Although welfare gains under the proposed FTA closely approximate those under open regionalism (concerted trade liberalisation on a most favoured nation basis), reducing the 5% GCC common external tariff to about 3% as part of the FTA negotiations would not only ensure near-maximum trade performance and welfare gains but also add further to the attractiveness of the GCC countries as a location for foreign direct investment.

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    Item Type: Working Paper
    Uncontrolled Keywords: Gulf Cooperation Council; Bahrain; Kuwait; Oman; Qatar; Saudi Arabia; United Arab Emirates.
    Subjects for non-EU documents: EU policies and themes > External relations > EU-Middle East
    EU policies and themes > External relations > international trade
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Centre for European Policy Studies (Brussels) > CEPS Working Documents
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 23 Feb 2008
    Page Range: p. 68
    Last Modified: 15 Feb 2011 17:43
    URI: http://aei.pitt.edu/id/eprint/6637

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