The Multifiber Agreement Phase Out and the EU-China Agreement of self-limitation of exports: impact on the Tunisian economy International workshop, “Bridging the gap: the role of trade and FDI in the Mediterranean”, Naples 8-9 Mohamed Ali MAROUANI Université Paris1-Sorbonne/IEDES, DIAL and ERF [email protected]
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The Multifiber Agreement Phase Out and the EU-China Agreement of self-limitation of exports: impact on the Tunisian economy
The Multifiber Agreement Phase Out and the EU-China Agreement of self-limitation of exports: impact on the Tunisian economy International workshop, “Bridging the gap: the role of trade and FDI in the Mediterranean”, Naples 8-9 Mohamed Ali MAROUANI Université Paris1-Sorbonne/IEDES, DIAL and ERF - PowerPoint PPT Presentation
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The Multifiber Agreement Phase Out and the EU-China Agreement of self-limitation of exports: impact on the Tunisian economy
International workshop, “Bridging the gap: the role of trade and FDI in the Mediterranean”, Naples 8-9
Mohamed Ali MAROUANIUniversité Paris1-Sorbonne/IEDES, DIAL and ERF
The MFA dismantling : a demand of developing countries The Agreement on Textile and Clothing (ATC) : 1995-2005 The accession of China to WTO in December 2001
Erosion of preferences for countries indirectly protected by developed countries quotas : competition between D.C.
Observed outcome : negative for MENA except Turkey
Better than expected : EU-China agreement June 2005
After January 2009 Developing an ex ante quantitative
assessment framework
Taking into account the dynamic dimension of the shock,
and labor market imperfections
What happened since the 1st January 2005 ? China increased its market share by 145% in
volume and 95% in value for products which quotas have been removed in 2005
Table 1: Changes in the Value of Exports of textile and clothing to the EU
CountryChina India Turkey Tunisia Morocco Egypt Jordan
% change in year-to-date Jan-Sept 2004/2005
45.0 16.0 3.3 -5.6 -9.1 -4.2 -11.4
Source: The World Bank (2006)
The EU-China agreement of June 2005 Many complaints from the European T&C Industry Inside the EU, heterogenous position
Producing countries vs importing Industry vs distributors China is a significant trading partner
Agreement imposed on ten categories of products (among 35 liberalized): fixes the rates of growth of Chinese exports between 8 and 12.5% Higher than the 7.5% which the special safeguard clause
would have allowed the EU to impose
The ex ante quantitative assessment framework An intertemporal GE model
Households smooth their consumption (intertemporal utility function)
Firms maximize their discounted value under the capital accumulation constraint
A quadratic adjustment cost function
The advantages of a dynamic setting Take into account the gradual dimension of the shock The expectations of agents, adjustments costs and demographics The evolution of public and external debt
The dynamic calibration: the economy is not on its steady state growth path
Structure of the intra-period model The production block (nested function)
Labor market: HT, efficiency wages and public employment
The income and expenditures block (including financial)
The foreign trade block (export demand function)
Equilibrium conditions and model closure: Macro, Government, Foreign Trade, Labor Market.
Imperfect labor markets and efficiency wages
Labor market segmentation
Efficiency wage theories
The imperfect monitoring model
Implementation in a multisectoral framework
The multisectoral efficiency wages model
i,j : sectors
f : skill
b : turn over rate
q : probability of being detected shirking
e : disutility of effort
r : discount rate
U : unemployment rate
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The database The SAM
Data manipulation: employment, wages, demographic hypothesis, structure of the labor force, etc.
Reference scenario includes the FTA between Tunisia and the EU
Determination of the tariff dismantling schedule in each industrial sector depending on the weight of each product in the four lists of the Euro-Tunisian Agreement.
The dynamic calibration procedure The economy is not on its steady-state growth path
Calibration of the macro parameters (depr, elasth, prt)
Calibration of the sectoral parameters (adjustment cost function share parameter)
Second calibration of the macro parameters
Until we approximately attain the observed growth path of the main macro and sectoral variables
The simulations First scenario: a gradual decrease of
export demand from 2002 to 2004 (10% in three years), than a decrease by 10% in 2005 and a decrease by 20% in 2009.
Second scenario: adds to the first a decrease of world prices of apparel products by 10% in 2009.
Evolution of the main variables characterizing the apparel sector in Tunisia, 2006-2020 (change in % of the reference scenario level)
2006 2009 2015 2020
SIM1 SIM2 SIM1 SIM2 SIM1 SIM2 SIM1 SIM2
Production -11.3 -14.9 -17.3 -32.4 -19.5 -36.7 -20.4 -38.3