_<u>Table 3: Nicaragua’s economic structure (2000)</u>_

|||<br>**Se**|<br>**ctoral**|<br>**shares**||**US we**|**ight**||**Tariffs**||
|---|---|---|---|---|---|---|---|---|---|---|
|||**Xp**|Μ|**Ex**|**Xc **|**M Us**|**Ex**<br>**US**|**Nic -**<br>**US**|<br>**Nic -**<br>**ROW**|**US -**<br>**Nic**|
||**Coffee**|2|0|20|0|14|26|8|6|0|
|**re**|**Sugar Cane**|1|0|0|0|0|0|0|0|0|
|**ltu**|<br>**Basic Grain**|3|1|1|4|72|0|29|17|0|
|**cu**|**Other Agri. Products**|3|2|7|5|18|3|8|4|11|
|**gri**|<br>**Livestock**|5|1|3|3|35|0|4|2|0|
|**A**|**Forestry**|1|0|0|1|93|0|1|1|0|
||**Fishery**|1|0|1|0|34|5|10|5|0|
|**in**<br>**e**|**Mining**|1|10|4|0|1|4|2|0|0|
|**in**<br>**En**|**Electricity Gas Water**|2|0|0|1|0|0|10|6|0|
|**M**<br>**g**|**Water Distribution**|1|0|0|1|0|0|0|0|0|
||**Meat and Fish Products**|5|0|23|5|19|27|18|8|3|
|<br>**ng**|**Sugar Producs**|2|0|5|2|6|11|8|7|0|
|**od**<br>**ssi**|<br>**Dairy**|2|1|3|3|32|0|12|8|0|
|**Fo**<br>**oce**|**Other Food**|4|8|2|11|19|0|7|4|1|
|<br>**Pr**|**Beverages**|2|1|1|6|9|0|12|6|0|
||**Tobacco**|0|1|1|1|2|9|4|0|7|
||**Textiles Clothing & Leather**|3|4|12|5|39|5|4|4|4|
|**ng**|<br>**Wood Products**|2|2|2|1|28|0|8|3|0|
|<br>**ri**|**Paper Print Products**|1|3|0|1|21|0|3|2|0|
|**er**<br>**ctu**|<br>**Refined Oil**|3|5|2|2|9|0|7|7|0|
|**Oth**<br>**ufa**|**Chemicals**|1|17|2|6|21|0|3|2|0|
|<br>**an**|**Glass No-Metal Products**|1|3|1|0|9|2|4|2|0|
|**M**|**Metal Products**|0|7|1|0|15|0|3|2|0|
||**Machinery and Equipment**|0|26|1|2|40|0|2|3|0|
|**es**|**Construction**|9|0|0|0|0|0|0|0|0|
|**vic**|**Commerce**|10|0|0|1|0|0|0|0|0|
|**er**|**Other Services**|29|5|4|28|24|1|0|0|0|
|**S**|**Transport Services**|5|1|4|8|24|3|0|0|0|
||**Total**|100|100|100|100|24|36|4|3||
|||**--**|**- Aggr**|**egate**|**secto**|**rs aver**|**ages**|**---**|||
||**Agriculture**|17|4|32|13|41|28|20|6||
||**Food Processing**|15|12|36|29|18|54|8|4||
||<br>**Mining and Energy**|4|10|4|3|1|64|2|0||
||**Oth Mfti**|12|68|20|19|28|14|3|3||
||**er anuacurng**||||||||||
||**Services**|53|6|8|37|24|40|0|0||

Source: Nicaragua SAM estimated by the author.

Notes: In the left panel, **Xp** represents the sectoral output as a percentage of total output, **M** the sectoral total imports, **Ex** the exports shares, **Xc** the private consumption shares. In the middle panel, **M US** the initial share of imports coming from the U.S. over total imports, **Ex US** the initial share of exports going to the U.S. In the right panel, there are tariffs: **Nic - US** and **Nic - ROW** are Nicaraguan tariffs against the U.S. and other partners imports, respectively, and **US - Nic** are the U.S. tariffs against Nicaraguan exports.

The main macro results for the trade policy reforms are described in the following subsections. First, we examine the effects of the unilateral non-discriminatory full liberalization in the benchmark scenario. Then, the CAFTA case is analyzed and compared with the benchmark and the effects of this regional agreement are decomposed into those originating from liberalization of Nicaragua with no response from the U.S. and those derived from the U.S. reciprocating. Finally, to assess the sensitivity of the results to the assumption of factor markets segmentation, both the non-discriminatory and the regional trade reforms are simulated allowing perfect factor mobility in the model. This set up should more closely represent the likely impact of the reforms in the longer run, although no factor accumulation or explicit dynamic effects are accounted for.

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