Simulating UK-Africa Trade Liberalisation: Nigeria
With the UK’s relationship with the EU likely to soon change fundamentally, new initiatives are called for in order to strengthen the UK’s trading relationships with its African trading partners. The assumption is made that the UK will leave the EU customs union and so, in the future, be in a position to negotiate new trade (in goods) agreements with third parties.
This working paper follows this reasoning and conducts a hypothetical analysis of complete post-Brexit liberalisation – or the establishment of a free trade area – between Nigeria (effectively ECOWAS) and the UK. The purpose is to understand what costs and benefits would accrue, and who would bear them, in a situation where the UK advances its level of integration with Nigeria beyond the current, non-preferential level.
The results of the simulations in this paper suggest that a mutually-beneficial arrangement could be achieved, but with a net cost to the UK taxpayer and revenue sacrifice on the part of Nigeria. No significant strategic risks due to trade diversion are indicated by the simulations, and the welfare gains to Nigerian consumers of manufactured items, machinery and electrical devices are significant.
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