Jensen, Jesper; Tarr, David G.
Description:
This paper develops an innovative 21
sector computable general equilibrium model of Armenia to
assess the impact on Armenia of a Deep and Comprehensive
Free Trade Agreement with the European Union, as well as
further regional or multilateral trade policy commitments.
The analysis finds that such an agreement with the European
Union will likely result in substantial gains to Armenia,
but shows that the gains derive from the deep aspects of the
agreement. In order of importance, the sources of the gains
are: (i) trade facilitation and reduction in border costs;
(ii) services liberalization; and (iii) standards
harmonization. A shallow agreement with the European Union
that focuses only on preferential tariff liberalization in
goods will likely lead to small losses to Armenia primarily
due to a loss of productivity from lost varieties of
technologies from the rest of the world region in
manufactured products. Additional gains can be expected in
the long run from an improvement in the investment climate.
The authors estimate only small gains from a services
agreement with countries of the Commonwealth of Independent
States, but significant gains from expanding services
liberalization multilaterally.