The Cost of non-Maghreb: Achieving the Gains from Economic Integration

The purpose of this paper is to estimate the impact of the integration of Maghreb countries into a free trade area on the main macroeconomic aggregates. By using the MIRAGE model and MacMap database, we tested different scenarios to estimate the gains or the potential losses of various plans of trade integration (Free trade area for the Maghreb countries, Custom Union between Maghreb countries, Maghreban Common Market). Our study suggests that the overall gains from liberalizing trade in goods (and removing various regulatory non-tariff barriers in the process) could reach at least USD 350 million. The increase in revenue through increases in production and wages would positively affect welfare levels for Maghreb consumers. The dynamic gains from liberalizing trade in goods can outstrip the static gains, with productivity improvements as the main driver. Our analysis shows that the creation of a common market is probably the most interesting and efficient option for the Maghreb countries.