The Impact of Trade Liberalization on Syrian Economy
Khaled Abdul Rahman Jomaa1, Yuko Akune2, Mitsuru
Okiyama3, Yamashita Masahiro4 and Suminori Tokunaga5
Graduate School of Life and Environmental Sciences, University of Tsukuba
1. Introduction:
Syria has produced heavy-grade oil from fields located in the northeast since the late 1960s. Syria's rateof oil production has been decreasing steadily, from a peak close to 610,000 barrels per day (bpd) in 1995
down to approximately 379,000 bpd in 2008. In parallel, Syria’s oil reserves are being gradually depleted andreached 2.5 billion barrels in 2009. Experts generally agree that Syria will become a net importer of petroleum
by the end of the next decade. Oil still accounts for a majority of the country's export income. Syria also
produces about 22 million cubic meters of gas per day, with estimated reserves around 240 billion cubic metersor 8.5 trillion cubic feet6.
Over the medium term, Syria faces challenges of: keeping strong growth developing non-oil sectors tocope with still important demographic pressures, with the decline in oil production, Integration into the global
economy, adapt of Arab Free Trade Area, and prepare for the dues of the partnership agreement with theEuropean Union, and also the Syrian application submitted for membership in WTO.
The problem: is how can Syrian Government maintain growth under the condition of decreasing of publicbudget revenue due to lower customs duties.
The general objective of this study is to evaluate the impacts of Trade liberalization in Syria for obtaining
approximately optimal trade policy, Therefore more detailed objective are showmen in the follows:-

To Exam the impact of reducing Custom Duties on Industrial sector.

-

To estimate the impact on the welfare of households.

This study adopting these two follows hypotheses:-

Custom duties' reduction in industrial sector in Syria, will improve the competitiveness of local production.

-

Custom duties' reduction in industrial sector will improve the welfare of households.

-

Creasing of public budget revenue due to lower customs duties.

1- Master Candidate, Faculty of Economics, Syria, Damascus University; Department of Argo Biology Resource’s and Technology, Graduate
School of Life and Environmental Sciences, University of Tsukuba, 2-1-1 Amakubo, Tsukuba, Ibaraki 305-0005, Japan. E-mail:khaledjomaa78@hotmail.com.
2- Reitaku University.
3- GENAI, Advanced Studies Research Organization.
4- Japan International cooperation Agency
5- Professor, Department of Argo Biology Resource’s and Technology, Graduate School of Life and Environmental Sciences, University ofTsukuba, 1-1-1 Tennodai, Tsukuba, Ibaraki 305-8572, Japan.
E-mail: stokuna@sakura.cc.tsukuba.ac.jp.

12. Forge in Trade in Syria:
The figures indicate that Syrian Economy face many problems: manufacturing sector except Textiles is
uncompetitive, thus most of exported products are raw, and domestic oil -which dominated high share of totalexports- might be depleted.
Syria could find good international markets for Textiles and Fruits, Vegetables and Preparations thereofduring 2007-2009 thus the exports of these two products increased.
Table No1. The Most important Exports by product groups
2003

2005

2007

2009

Value(Milli
ons of S.P.

Share in
total
exports

Value
Millions of
S.P.

Share in
total
exports

Value
Millions of
S.P.

Share in
total
exports

Value
Millions of
S.P.

Share in
total
exports

Crude Oil

165518.06

62.5%

17873042.1%

184350.1231.8%132525.607

27.1%

Textiles17204.078

6.5%

17964

4.2%

83562.431

14.4%

53066.4755

10.9%

Fruits, Vegetables andPreparations thereof

8828.595

3.3%

9249

2.2%

48881.912

8.4%45794.5184

9.4%

Raw Cotton (Fiber)

6420.049

2.4%

8174

1.9%

15376.259

2.7%

3682.19015

0.8%Live Animals and Meat

10300.897

3.9%

10438

2.5%

20839.278

3.6%28099.8288

5.8%

Phosphate

1412

0.5%

2761

0.7%

2171.5034

0.4%6461.30612

1.3%

Raw Hides and Leather(excluding Fur skins)

764.783

0.3%

897

0.2%

4082.870.7%

862.610242

0.2%

Lentils1259.398

0.5%

1573

0.4%

6672.1864

1.2%

917.521925

0.2%

Tobacco108.288

0.0%

167

0.0%

124.3790.0%

274.511736

0.1%

Wheat

0

0.0%

348

0.1%

2807.173

0.5%

19.0557

0.0%

Total

265038.93424300.35

579034.36

488330.261

Resource: Quarterly Statistical bulletin, years 2010-2009, tables 43-38 Central Bank of Syria
Table 2 indicate that there is a significant increase in Fuels which confirm the point of view that Syria has
a big problem in foreign trade policy, we also notes that the demand of imported fuel decreased significantly in2009 because the fuel subsidies omitted in the middle of 2008 by government, so the impact of this policy
affected the fuel consumption in 2009, we also notes that two capital goods, namely, Machinery andEquipment, Transport Equipment’s dominated a consolidated import share of 26.5% in 2003 which decreased
to 16.7% in 2009, another important imported goods are Metal and Products thereof, which increased
according to the improvement of construction sector.
Table No. 2 The Most important Imports by product groups
2003
Value(Milli
ons of S.P.

2005
Value(Milli
ons of S.P.

2007
Value(Millions
of S.P.

2009
Value(Millions of
S.P.
69533.70255

Share in
total
imports
9.7%

Machinery and Equipment

40854.706

Share in
total
imports
17.3%

61276

Share in
total
imports
12.2%

66793.787

Share in
total
imports
9.8%

Metal and Products thereof

35029.207

14.8%

63678

12.7%

100302.971

14.7%

139095.535

19.5%

Other Foodstuff

31731.366

13.4%

44942

8.9%

46905.309

6.9%92972.7671

13.0%

2

Chemicals and Products
thereof

20450.821

8.6%

32252

6.4%

38574.518

5.6%53658.44821

7.5%

Textiles and Textile
Articles19389.564

8.2%

23614

4.7%

19867.216

2.9%

33886.22319

4.7%

Transport Equipment’s

21738.313

9.2%

38314

7.6%

50589.835

7.4%50093.91749

7.0%

Resins, Artificial Rubber
and Products thereof

19640.895

8.3%

32206

6.4%

46686.464

6.8%52641.26972

7.4%

Fuels

8608.524

3.6%

12365024.6%148910.7674

21.8%37376.58908

5.2%

Paper and Products thereof

7363.689

3.1%

10333

2.1%

12262.114

1.8%14400.96794

2.0%

Raw and Refined Sugar

5910.436

2.5%

8909

1.8%

15781.10635

2.3%

24514.20214

3.4%

Wood and Products thereof

6618.841

2.8%

8964

1.8%

10130.357

1.5%12905.17198

1.8%

Fruits and Vegetables

2722.329

1.1%

3579

0.7%

6857.217

1.0%12010.20948

1.7%Live Animal, Meat andCanned Meat

1874.408

0.8%

2022

0.4%

8811.424

1.3%

11757.43948

1.6%684556.5197

1714215.594

236768502367.733

Resource: Quarterly Statistical bulletin, years 2010-2009, tables43-38 Central Bank of Syria

3. Customs Duties:
Goods imported into Syria are subject to a customs duty and "unified" tax. Rates are progressive,
Depending on the Syrian government's view of the necessity for the products. Food and industrial raw
materials carry low rates while luxury goods, such as automobiles, have high rates.
The rate of Exchange according to official price of U. S $ was (4.05) S.P for imports and (3.90) S.P for
Exports until 1986. With the beginning of 1987 it became (11.25) S.P for imports and (11.20) S.P for exports,
in 2000 it became (46.50) S.P for imports and for export it was (46.00) S.P. In 2004 the official price forimports and exports became (48.65) S.P, during 2005 the rate of exchange became (50.00) SP for Imports. Andfor exports it became as Central Bank of Syria issue, in 2008 it became (46.65) S.P for Imports and (46.47)
S.P for Exports, according to the average of annual official prices, issued from Central Bank of Syria7 .
Until 2006 Syrian authorities apply three different exchange rates8, these three rates consolidated in one
free managed rate in 2006.this different rates apply to artificially low imports value, and most imports of basic
goods evaluated at the customs exchange rate 11.25 LS/$, so Syria imposed very high effective tariff rate.
Minimum effective Tariff rates for Food and Live Animals (SITC0)are very low, with the exception ofother fruits, and also other products. (salt, children food, spice, coffee beans, etc.) . Even the maximum rates
are often at reasonable levels and, while significantly higher, usually not excessive, tariff imposed on Onion
7 ‐ Syrian Statistical Abstract, Central Bureau Of Statistics, 2010.
8 ‐ Syrian authorities applied three rates of exchange : the first one is: official rate 11.25 SP , the second one is:
Neighbor countries Exchange rate 46 S.P, the third one is: Tourist exchange rate 23 S.P which applied to Private
financial transfers and most of the travel and tourism, and remittances from state employees abroad , and medical
expenses.

3

(fresh and dried) and other fruits and Preservation of vegetables and fruits in 2007 is very high, Syria has
limited local industry for Canning vegetables and fruits , so government used this policy to protect local
production, instead of improving the competitiveness of these production, Tariff of Logging and forestry
Cocoa and chocolates is also high.
- Beverages and Tobacco carry rather high minimum effective tariff rates and high maximum effective
tariff rates, also tariff imposed in 2007 is very high especially for Spirits and wine which can become moreprohibitive, but in case of tobacco products it is still lower than effective tariff rate.
- The average of Minimum effective Tariff rate for Manufactured goods (SITC6), was not high, but as
Syria has a limited local industry for Manufacture of cutlery, hand tools and general hardware (knives, scissors,
spoons, forks, saws, saw blades, etc.), and Non-electric home appliances: cooking ovens, heaters, so thegovernment used protection policy for these production, this policy became dipper in 2007, high tariff rate
has imposed on several products , especially Ceramic ware, Non-electric home appliances: cooking ovens,heaters, Electric home appliances: Vacuum cleaners, Electric home appliances: other home appliances.
Most of local industries are protected by government , this protection policy couldn’t be used when Syria
enforced to decrease Tariff rate according to international agreement, Tariff for some of these products
decreased in 2007,in general the average of tariff rate in 2007 was negligible.
-Machinery and Transport Equipment’s(SITC7):the general picture seems to be that most machinery
carries low effective tariff rates more heavily, while high rates are levied on Spare parts (Spare parts forvehicles and transportation equipment’s, Manufacture of bodies (coachwork) for motor vehicles while spareparts are taxed somewhat), also high rates are levied on other two kind of machines (Telephony transmitters,
Photographic cameras).
In general the average of tariff rate in 2007 is high, which means more restrictions on importing very
important factor.
We note that: high rates are levied on some important machines for household use (TV and video
cameras, Television and radio receivers (TVs, radios), and Air conditioners and related spare parts) which
effect negatively on their standard of living.
The tariff rate on some kinds of vehicles also increased (Manufacture of non-agricultural motor vehicles
including those of special use (tankers refuse collectors, street sweepers, etc.), and Trailers' (excluding railway
trailers')).
This group is very important to focus on, in simulation to find the impact of trade liberalization, cause
almost , tariff reduction on this group will effect significantly on the whole Syrian economy.

44. Simulation:
The Syrian CGE model is constructed with 27 equations using Social Accounting Matrix Data in Syria 2007,
and solved by GAMS program, this model used to simulate the follows policy scenarios:-

Completely liberalization of all Industrial activities (Tariff = 0 for all activities).

-

Completely liberalization of Manufacture of Food Products, and continued protecting other Activates(Tariff = 0 for Manufacture of Food Products).

-

Completely liberalization of Manufacture of tobacco products, and continued protecting other Activates(Tariff = 0 for Manufacture of tobacco products).

-

Completely liberalization of Manufacture of footwear and leather products, and continued protecting other
Activates (Tariff = 0 for Manufacture of footwear and leather products).

-

Completely liberalization of Manufacture of Textile and wearing apparel, and continued protecting other
Activates (Tariff = 0 for Manufacture of Textile and wearing apparel).

-Completely liberalization of Manufacture of paper and paper products, and continued protecting other
Activates (Tariff = 0 for Manufacture of paper and paper products).

-

Completely liberalization of Wood Industries, and continued protecting other Activates(Tariff = 0 for

Wood Industries).
-

Completely liberalization of Manufacture of Chemicals and Chemical Products, and continued protecting
other Activates (Tariff = 0 for Manufacture of Chemicals and Chemical Products).

-

Completely liberalization of Petroleum products, and continued protecting other Activates (Tariff = 0 for
Petroleum products).

-

Completely liberalization of Metal Industries, and continued protecting other Activates(Tariff = 0 for

Metal Industries).
5. Results:-

revenue losses due to lower import tariff can be sizable for Syrian government, but it ensure relatively
cheap imports for industrial sector, while government seek for protecting domestic industries through hightariff rates on non-basic consumption goods.

-

Analysis of effective tariff rates -which corrects the overvalued customs exchange rates - finds rather low
average effective tariff rates for major product categories. Only few selected items carry prohibitive tariff
loads

-

Tariff reduction reflected to private households’ welfare and stimulates private consumption,-

Simulation result. Trade liberalization hardly affects the costs of input usage, since initial tariff rates are
already low.

-

Private consumption is the main beneficiary of trade liberalization. Real disposable income of privatehouseholds rises by approximately the amount of lost tariff revenue. This additional income is partiallyspent on5-

imports and partially spent on domestic goods.

-

Domestic industries, which suffer from increased competition of imported output goods, benefit fromincreased private household demand for their products

1. Abstract:
CGE Model constructed using Social Accounting Matrix Data in Syria 2007, and solved by GAMS
program, this model allows for government monopolies in selected sectors of the economy, scenarios of tradeliberalization are studied in simulations of a CGE model of the Syrian economy.
As a result, lost tariff revenue basically benefits private consumption. The government budget deficit
increases sizably under radical liberalization scenario. However, in the medium term industrial Exports will
increase
2. References-

Perrihan Al Rifffai, Agricultural Sector liberalization alternative scenarios, 2009.

-

Lucke, Bernd, 2001: The Fiscal Impact of Trade Liberalization, Syria 2001.

-

Nobuhiro Hosoe, and others, "Computable General Equilibrium Modeling" , 2010, P129-

Statistical Abstract2010 Table 21/15, Central Bureau Of Statistics.

-

Central Bureau of Statistics, 2010-2009. Syria, Office of the Prime Minister.

-

Quarterly Statistical bulletin, years 2010-2009, tables43-38 Central Bank of Syria.

-

JICA, SAM and CGE Model Data of Syria2011.

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