Trade Policies, Regional Integration, Poverty and Income Distribution in Senegal

Since January 2002 and within the framework of the sub-regional economic integration process conducted by the West African Economic and Monetary Union (WAEMU), Senegal has adopted the institution of a Common External Tariff (CET) and the harmonization of the tax system. These measures have considerably reduced the protection of its economy (50% reduction in customs duties) and consolidated its domestic tax system. Such trade reforms induce considerable general equilibrium effects. The objective of this paper is to assess the impact of trade liberalization scenarios in Senegal on the well-being of both rural and urban households.The findings of this study reveal that Government has, under the implementation of the CET, given more priority to fiscal consolidation than to the potential negative effects of a higher VAT on income distribution and the well-being of households. This arbitration falls in line with the usual spirit of local stabilization and adjustment policies which have always been characterized by the primacy of fiscal rehabilitation over the enhancement of competitivity and the reflation of economic growth.