An Egypt-United States Free Trade Agreement: Economic Incentives and Effects

CEPR Discussion Paper Series Number 1882

Posted: 25 Sep 1998

See all articles by Bernard Hoekman

Bernard Hoekman

Robert Schuman Centre for Advanced Studies; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Centre for Economic Policy Research (CEPR)

Denise Eby Konan

University of Hawaii at Manoa

Keith E. Maskus

University of Colorado at Boulder - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: May 1998

Abstract

This paper explores the economic impact of a free trade agreement (FTA) between Egypt and the United States, assuming that Egypt implements both the recently agreed Arab League FTA and a Partnership Agreement with the European Union. An Egypt-United States agreement would improve Egypt's economic welfare. Gains would be maximized if the agreement were to greatly reduce the prevalence of non-tariff barriers and red tape costs, something that does not appear to be likely under the Arab and EU FTAs. If so, the modelling exercise suggests that both welfare and US exports to Egypt would rise significantly. Arab countries should not be concerned with an Egypt-United States agreement, as there are no major implications for exports to Egypt. The share of Egypt's imports originating in the rest of the world declines significantly under the FTA scenarios, however. This is costly to both Egypt and to these trading partners. Such costs can be avoided if external trade barriers are lowered in conjunction with the implementation of the various FTAs.

JEL Classification: F13

Suggested Citation

Hoekman, Bernard and Konan, Denise Eby and Maskus, Keith E., An Egypt-United States Free Trade Agreement: Economic Incentives and Effects (May 1998). CEPR Discussion Paper Series Number 1882. Available at SSRN: https://ssrn.com/abstract=125389

Bernard Hoekman (Contact Author)

Robert Schuman Centre for Advanced Studies ( email )

Fiesole, Tuscany
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Denise Eby Konan

University of Hawaii at Manoa ( email )

Honolulu, HI 96822
United States

Keith E. Maskus

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States
303-492-7588 (Phone)
303-492-8960 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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