Trade Liberalization in Egypt

Abstract

We develop a computable general equilibrium model of Egypt to analyze proposed reforms in its trade policies, including a partnership agreement (PA) with the European Union (EU). The model has multiple trading regions and allows for administrative trade barriers and tariffs. We compute the revenue impacts of trade liberalization and the required changes in distortionary commodity taxes to maintain a fixed real government budget. Egypt's greatest potential gains come from jointly removing its administrative trade barriers and adopting globally free trade. The PA with the EU could lower or raise Egypt's welfare, depending on prior trade reform.

JEL Classification: F13, F14, F1, D58