From Bilateral Trade to Multilateral Pressure: A Scenario in the EU Relation with Sudan
Posted: 28 Sep 2010
Date Written: September 28, 2010
This paper tries to investigate the economic consequences of a scenario where the EU imposes economic sanctions on Sudan. The idea of the paper is motivated by the deteriorating relations between Sudan and EU endorsed by the devastating conflicts in Darfur region and its related implications in which the ICC is involved. Another factor supporting the idea is the U.S. encouragement to create multilateral pressure on the country, hence change the behavior of the government. The global CGE model of GTAP and its Africa Database is employed in this paper. The simulation bans importation into the EU from Sudan as well as exportation to Sudan from the EU. The 39 regions of GAD are aggregated to 12 including Sudan, EU, and other regions related to Sudan, while the 57 sectors are aggregated to 15. The results suggest that both income and expenditure sides of the Sudanese GDP will decline due to sanctions. Trade balance will witness a surplus due the big decline in the country’s imports, as all imports will fall. However, the major impact is coming from the decreasing EU sourced imports like light manufacturing, petroleum-coal products, and heavy manufacturing which represents big shares in the total Sudanese imports value. At the time that the results denominate Sudan as the ultimate looser, it shows that the East Asian countries led by China are gaining. Most of the Sudanese trade with the EU seems to be shifting to these countries. However, ‘Rest of Africa’ region doesn’t have any welfare losses, while it has gains in some sectors. Domestic output in MENA, Egypt, Kenya, and Ethiopia in some sectors will fall due to the EU sanctions on Sudan, reflecting the regional dimension that sanction can have.
Keywords: Sanctions, EU, Sudan, CGE Models
JEL Classification: A2, D1, D2, D6
Suggested Citation: Suggested Citation