MOROCCO FREE-TRADE AGREEMENT WITH THE EU - A QUANTITATIVE ASSESSMENT

Using an applied general equilibrium model, we find that the EU-Morocc o free trade area (FTA) will increase Moroccan welfare by about 1.5% o f its GDP, showing that trade diversion is not dominant. The gains inc rease to about 2.5% of GDP if Morocco adds trade liberalization with t he rest of the world while adjustment costs are only slightly higher, partly reflecting the absence of trade diversion with global liberaliz ation. We show what are the key modeling assumptions and parameter cho ices that affect the estimates in models of this type, employing syste matic sensitivity analysis as well as graphical exposition.