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EU-RSA Free Trade Agreement: Dairy and Sugar Sector Liberalization Study

Explore the effects of partial liberalization of dairy and sugar sectors in the EU and RSA under the FTA. Experiment with reduced tariffs and analyze welfare gains, trading partner importance, and sector production changes. Conclude that the liberalization is beneficial and explain the protection of sensitive sectors politically.

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EU-RSA Free Trade Agreement: Dairy and Sugar Sector Liberalization Study

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  1. EU-RSA Free trade agreement -- Partial liberalization of the Dairy and sugar sectors in the EU • Motivation: Exploration of importance of sensitive sectors • Experiment: 50% reduction unliberalized sensitive sectors: milk and sugar. • Implementation: • modification to Base scenario by a change in cmfstart file to set definition

  2. Background Information • EU Tariff rates reduction • Milk: 87.7%  43.8% • Sugar: 76.4%  38.2% • Importance of trading partners in both sectors (milk, sugar)

  3. Results • Welfare gains in EU and RSA:

  4. Results • Sources of Welfare gain in EU and RSA:

  5. Results • Increase in South African exports to the EU (qxs)

  6. Results • Change in EU and RSA’s Sugar and Milk Production (qo)

  7. Conclusion • Milk and sugar sectors in the EU would face a small loss for the benefit of all • Partial liberalization of milk and sugar in the EU-RSA FTA is a Win-Win situation • Political economics can explain the protection of these sectors to the detriment of the welfare as a whole.

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