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Journal of Economic Integration 2022 December;37(4) :705-733.
DOI: https://doi.org/10.11130/jei.2022.37.4.705
Deeper Integration or Open Regionalism in the Indian Ocean Rim Association (IORA): A CGE Approach

Abdallah Akintola1 Houcine Boughanmi1 Alessandro Antimiani2 Lokman Zaibet 1 and Hemesiri Kotagama 1

1College of Agricultural and Marine Sciences, Sultan Qaboos University, Sultanate of Oman
2European Commission, Belgium
Corresponding Author: Abdallah Akintola ,Email: abdallah.akintola@gmail.com
Copyright ©2022 Journal of Economic Integration
ABSTRACT
The Indian Ocean Rim Association (IORA) is a regional association based on the principle of open regionalism to promote liberalization through trade and investment facilitation. This study compares two main scenarios with the ingredients of a deeper regional integration compared to the IORA's present open regionalism status. Scenario I evaluates the effects of gradual tariff cuts on IORA, while Scenario II combines the impact of tariff cuts, non-tariff measures (NTM) reduction, and trade facilitation. A recent recursive dynamic model, called Global Trade Analysis Project recursive dynamic model (GTAP-RD), was used to understand the adjustment path. The result shows welfare gain for all IORA countries when a trade liberalization involving tariff cuts is complemented with NTM reduction and trade facilitation. In addition, the "NTM spillover" effect on some non-IORA members (the rest of Gulf Cooperation Council, the rest of Greater Arab Free Trade Agreement, and the United Kingdom) was observed. The results suggest that IORA has more to gain if it involves a deeper regional integration than the present form of open regionalism.

JEL Classification
F14: Empirical Studies of Trade
F15: Economic Integration
Keywords: integration | Indian Ocean Rim Association | non-tariff measures | trade facilitation | dynamic model
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