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Computational Analysis of the US FTAs with Central America, Australia and Morocco

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Author Info
Drusilla K. Brown
Kozo Kiyota
Robert M. Stern

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Abstract

We use the Michigan Model of World Production and Trade to assess the economic effects of the US bilateral FTAs negotiated with Central America, Australia and Morocco. The model covers 18 economic sectors in each of 22 countries/regions and is based on version 5.4 of the GTAP database for 1997 together with specially constructed estimates of services barriers and other data on sectoral employment and numbers of firms. The distinguishing feature of the model is that it incorporates imperfect competition in the manufacturing and services sectors, including monopolistic competition, increasing returns and product variety. The modelling focus is on the effects of the bilateral removal of tariffs on agriculture and manufactures and services barriers. Rules of origin and other restrictive measures and the non-trade aspects of the FTAs are not taken into account due to data constraints. The computational results indicate that the benefits of bilateral FTAs for the United States and partner countries are rather small in both absolute and relative terms, and that far greater benefits could be realised if the United States and its FTA partners adopted unilateral free trade and especially if multilateral free trade was adopted by all countries/regions in the global trading system. Copyright 2005 Blackwell Publishing Ltd..

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File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-9701.2005.00743.x
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Publisher Info
Article provided by Blackwell Publishing in its journal World Economy.

Volume (Year): 28 (2005)
Issue (Month): 10 (October)
Pages: 1441-1490
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Handle: RePEc:bla:worlde:v:28:y:2005:i:10:p:1441-1490

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  1. Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2005. "Computational Analysis of the Free Trade Area of the Americas (FTAA)," Working Papers 528, Research Seminar in International Economics, University of Michigan. [Downloadable!]
    Other versions:
  2. Bussolo, Maurizio & Niimi, Yoko, 2006. "Do regional trade pacts benefit the poor ? An illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua," Policy Research Working Paper Series 3850, The World Bank. [Downloadable!]
  3. Richard G. Harris & Peter E. Robertson, 2007. "Dynamic Gains and Market Access Insurance: Another look at the AUSFTA," Discussion Papers 2007-23, School of Economics, The University of New South Wales. [Downloadable!]
  4. Mahinda Siriwardana, 2006. "Australia's Involvement in Free Trade Agreements: An Economic Evaluation," Global Economic Review, Taylor and Francis Journals, vol. 35(1), pages 3-20, March. [Downloadable!] (restricted)
  5. Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2004. "Computational Analysis of the Menu of U.S.-Japan Trade Policies," Hi-Stat Discussion Paper Series d04-63, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
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