| This study employs a multisectoral computable general equilibrium model of Mauritius designed to explore the economic consequences of the removal of the preferential pricing agreements for Mauritius' sugar exports by the European Union, the United States, or jointly. This is performed with endogenous tax changes in the distortionary value-added taxation or the lump-sum taxation to maintain a constant government budget. Each sugar export price change affects other sectors and lowers welfare in most cases. Mauritius' greatest gain comes from the removal of the preferential price by the United States with value-added tax replacement. However, unilateral tariff liberalization with the European Union, the Southern African Customs Union, the United States and the Southern African Customs Union jointly, and with all of Mauritius' trade constituents yield further decreases in Mauritius' welfare when combined with sugar export price changes. The country is most adversely affected in the full tariff liberalization case with value-added tax replacement, where region-specific unilateral trade is usually better than unilateral global free trade. |
