Uganda’s Trade and Revenue Effects with the EAC Countries, DRC and Sudan

Gaalya Micah Samuel

Research and Planning Division-Commissioner General’s Office, Uganda Revenue Authority, Kampala, Uganda.

DOI: 10.4236/me.2015.63031                

Abstract

A WITS partial equilibrium model is used to perform simulations on Uganda’s trade and revenue effects with the EAC countries, DRC and Sudan using highly disaggregated HSC six-digit level trade data. At the zero percent tariff rate, tariff revenue effects in all country cases were small. At the 25 percent tariff rate, tariff revenue effects in all country cases simulated were large. This indicates that the revenue implications of changes of applied rates depend on the applied tariff rate on imports. High tariff rates show larger revenue effects, while low tariff rates show lower revenue effects. However higher tariff rates show lower trade volumes and lower tariff rates high trade volumes.

Keywords

Tariff Rate, Trade Effects, Revenue Effects, EAC Countries, DRC and Sudan

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	Othieno, L. and Shinyekwa, I. (2011) Trade, Revenue and Welfare Effects of the East African Community Customs Union Principle of Asymmetry on Uganda: An Application of Wits-Smart Simulation Model. Research Series 150480, Economic Policy Research Centre (EPRC), Kampala.
[2]	Laird, S. and Yeats, A. (1986) The UNCTAD Trade Policy Simulation Model: A Note on the Methodology, Data and Uses, UNCTAD Discussion Paper No. 19, Geneva.
[3]	Mugisha, E., Onyango, C.H. and Mugoya, P. (2009) An Evaluation of the Implementation and Impact of the East African Community Customs Union. EAC Secretariat, Arusha.
[4]	Nielsen, L. and Zouhon-Bi, S.G. (2007) ECOWAS—Fiscal Revenue Implications of the Prospective Economic Partnership Agreement with the EU. Africa Region Working Paper Series Number 103, World Bank, Washington DC.
[5]	Khorana, S., Kimbugwe, K. and Perdikis, N. (2009) Assessing the Welfare Effects of the East African Community Customs Union’s Transition Arrangement on Uganda. Journal of Economic Integration, 24, 685-708. http://dx.doi.org/10.11130/jei.2009.24.4.685
[6]	McIntyre, M. (2005) Trade Integration in EAC: An Assessment for Kenya. IMF Working Paper No. 05 (143), Washington DC.
[7]	Viner, J. (1950) The Customs Union Issue. Carnegie Endowment for International Peace, New York.
[8]	Meade, J.E. (1955) The Theory of Customs Unions. North-Holland, Amsterdam.
[9]	Panagariya, A. (1997) The Meade Model of Preferential Trading: History, Analytics, and Policy Implications. In: Cohen, B., Ed., International Trade and Finance: New Frontiers for Research, Essays in Honour of Peter B. Kenen, Cambridge University Press, New York, 57-88. http://dx.doi.org/10.1017/CBO9780511528392.004
[10]	Lipsey, R.G. (1960) The Theory of Customs Unions: A General Survey. Economic Journal, 70, 496-513. http://dx.doi.org/10.2307/2228805
[11]	Lipsey, R.G. (1957) The Theory of Customs Unions: Trade Diversion and Welfare. Economica, 24, 40-46. http://dx.doi.org/10.2307/2551626
[12]	Johnson, H.G. (1960) The Economic Theory of Customs Union. Pakistan Economic Journal, 10, 14-32.
[13]	Cooper, C.A. and Massell, B.F. (1965) Toward a General Theory of Customs Unions for Developing Countries. The Journal of Political Economy, 73, 461-476.
[14]	Mundell, R.A. (1964) Tariff Preferences and the Terms of Trade. The Manchester School, 32, 1-13. http://dx.doi.org/10.1111/j.1467-9957.1964.tb01029.x
[15]	Corden, W.M. (1966) The Structure of a Tariff System and the Effective Protective Rate. Journal of Political Economy, 74, 221-237. See Effective Rate of Protection. Cowen, Glazer and McMillan, 1994.
[16]	Busse, M. and GroBmann, H. (2004) Assessing the Impact of ACP/EU Economic Partnership Agreement on West African Countries. HWWA Discussion Papers 294, Hamburg Institute of International Economics (HWWA), Hamburg.
[17]	Tinbergen, J. (1962) Shaping the World Economy: Suggestions for an International Economic Policy. The Twentieth Century Fund, New York.
[18]	Li, X. (2004) Trade Liberalization and Real Exchange Rate Movement. IMF Staff Papers 51, Washington DC, 553-584.
[19]	Piermartini, R. and Teh, R. (2005) Demystifying Modelling Methods for Trade Policy. Discussion Paper no. 10, World Trade Organization, Geneva.
[20]	Cernat, L. (2001) Assessing Regional Trade Arrangements: Are South-South RTA’s More Trade Diverting? International Trade 0109001, EconWPA, Munich.
[21]	Verdoorn, P.J. (1960) The Intra-Block Trade of Benelux. In: Robinson, E.A.G., Ed., Economic Consequences of the Size of Nations, Macmillan & Co., London, 291-332.
[22]	Karemera, D. and Koo, W. (1994) Trade Creation and Diversion Effects of the U.S.-Canadian Free Trade Agreement. Contemporary Economic Policy, 12, 12-23. http://dx.doi.org/10.1111/j.1465-7287.1994.tb00408.x
[23]	Busse, M. and Shams, R. (2003) Trade Effects of the East African Community: Do We Need a Transitional Fund? Hamburgische Welt-Wirtschafts-Archiv (HWWA) Discussion Paper 240, Hamburg.
[24]	Busse, M., Matthias, H. and Koopmann, G. (2000) Preferential Trade Agreements: The Case of EU-Mexico. HWWA Discussion Papers 103, Hamburg Institute of International Economics (HWWA), Hamburg.
[25]	Zgovu, E., Milner, C. and Morrissey, O. (2007) Adjusting to Bilateral Trade Liberalisation under an EPA: Evidence for Mauritius. University of Nottingham, Nottingham.
[26]	Karingi, S., Lang, R., Oulmane, N., Perez Jallab, M.S. and Hammouda, H.B. (2005) Economic and Welfare Impacts of the EU-Africa Economic Partnership Agreements. ATCP Work in Progress No. 10, Addis Ababa.
[27]	Grunbum, M. (2007) Trade and Tariff Revenue Effects for the Organization of Eastern Caribbean. University of Florida, Gainesville.