LOS PARTIDOS Y LOS MOVIMIENTOS SOCIALES

Most countries have been concerned with the revenue implications of the EPAs. In particular, they will be coming into force at the mid-point period when governments will be under enormous pressure to show their results in addressing the Millennium Development Goals. In that respect, quantifying the revenue impacts of the EPAs has been one of the preoccupations of the studies undertaken to assess them. EUROSTEP (2004) provides some estimates based on fi ve case studies. Th ree of the countries are African: Cameroon, Benin and Ghana. Th e study estimated that between 20-30 percent of the Cameroonian governments revenue would be lost following a reciprocal free trade with the EU, taking into account accumulated job losses, tax shortfalls and lower growth rates. Ghana on the other hand would experience 20 percent reduction in cocoa exports revenues alone considering that cocoa is the largest export to the

EU of Ghana making up to 37 percent of all exports. Th e methodology applied in this study could be criticized for its lack of rigour, and also for the lobby-factor, as it relies on experiences and forecasts of people from the fi ve countries working in the sectors that are critical to poverty alleviation. In spite of lack of methodological rigour, and allowing for lobby-factor, there is the industry knowledge by the respondents, which provide some insights on potential outcomes.

COMESA (2002) looks at the broad issues that its member countries would have to contend with in the EPAs negotiations. Th e issues covered in this early impact assessment focused on the EPAs impacts on trade and economic policy orientation. Th e study concluded that the costs of EPAs would be the loss of revenue to governments and the associated adjustment costs of developing alternative sources of government revenue. Th e broad fi nding was that if all EU imports came in free of duty, on the basis of trade statistics for 2000, governments in the COMESA region would lose about a quarter (25 percent) of their trade taxes and about six percent of their total tax revenue. Th e COMESA study, like other studies, correctly notes that while a loss of six percent of tax revenue may not seem to be a huge amount of money to make up over an extended period, the precarious situation in which most fi scal systems in COMESA countries are in would present major adjustment diffi culties. Reforming the tax administrations in COMESA countries with a view to establishing elastic and buoyant tax systems would be considerable adjustment costs for these countries.

While the COMESA study was more analytical than empirical, it clearly identifi ed factors upon which the loss of revenue to governments would be dependent upon: percentage of total tax revenue made up by trade taxes; the percentage of imports coming in from the EU; and whether the supply of goods from the EU will increase as a result of a reduction in tariff s. Suffi ce to add at this point that the COMESA (2002) study, using ex post analysis16_{, concluded that just as the revenue implications of the introduction} of the COMESA FTA were overestimated, there was a danger that the EPAs revenue implications for COMESA countries might also be overestimated.

Another early study was undertaken on the likely impacts of the EPAs on SADC countries17_{. Tekere and} Ndlela (2003) in addressing the EPAs question for SADC examined the trade aspects of the Cotonou Agreement for the Southern African countries. Relying on a partial equilibrium modelling framework, the study showed that EPAs would result in signifi cant reduction in revenues. Due to the signifi cant imports from the EU, all the countries would experience revenue shortfalls immediately the process of tariff s dismantlement began under the reciprocation process. Cumulatively, countries like Tanzania will experience at least 37 percent decline in tariff revenues. Signifi cant reductions will also occur for Namibia at 24 percent. Th ese shortfalls while not unexpected will pose serious fi scal adjustment challenges for these countries. Busse et al. (2004) studied the potential impacts of EPAs on ECOWAS countries. Th eir study focused on the trade and budget eff ects. Applying a partial equilibrium methodology that follows the Viner model, Busse et al. examined the implications of complete tariff barrier elimination for EU goods in ECOWAS

countries. Th e study found that in absolute terms, decline in import duties would range from US$2.2 million in Guinea-Bissau to US$487.8 million in Nigeria. As a share of total import taxes, the decline will be largest in Cape Verde where 80 percent of import revenues are likely to be lost. Th e fi scal budget positions of the ECOWAS countries will therefore be under substantial stress in the case of total tariff barrier elimination. Cape Verde and Gambia will particularly be severely aff ected given the estimated total government revenue shortfalls associated with EPAs of 20 and 22 percent respectively. Assuming no adjustment from the expenditure side, the budget defi cits in these countries will worsen by 4.1 and 3.5 percent of GDP respectively.