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Beyond the Uruguay Round: The implications of an Asian free trade area

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  • Lewis, Jeffrey D.
  • Robinson, Sherman
  • Wang, Zhi

Abstract

The Pacific Rim members of the Asia Pacific Economic Cooperation (APEC) group have different views about the role each should play in fostering further trade liberalization. But at the November 1994 APEC meetings in Bogor they committed themselves to forming an APEC free trade area. The authors explore: 1) the impact of such a free trade area on trade, welfare, and economic structure of the Pacific Rim economies and the European Union; 2) the implications of forming a partial free trade area, excluding such potential partners as China, the Association of Southeast Asian Nations (ASEAN) economies, or the United States; 3) whether an APEC free trade area provides more benefits than full trade liberalization that includes the European Union. They analyze these issues using a multicountry, computable general equilibrium model to simulate alternative liberalized trade scenarios. Their findings are as follows. Under the base-case scenario (in which all tariff and most nontariff barriers are removed among the APEC countries, China, Japan, ASEAN, the Asian newly industrializing economies (NIEs), and the United States): all APEC countries gain in GDP and the excluded European Union loses sligthly. Gains are greatest for the poorer countries, for whom trade externalities are more significant. Trade expands greatly, and although there is some trade diversion away from the European Union and the rest of the world, that is swamped by the creation of trade within the free trade area. The U.S.-Japan trade balance improves only slightly (by $1.4 billion), and the U.S.-China balance are much larger, suggesting that changes in sectoral protection make movements in particular bilateral trade balances nearly impossible to predict. When one economy is excluded: there are gains from making the free trade area as broad as possible. Omitting any one region (China, the United States, or the ASEAN 4) makes that region significantly worse off and lowers the gains for all other members as well

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Bibliographic Info

Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 6 (1995)
Issue (Month): 1 ()
Pages: 35-90

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Handle: RePEc:eee:chieco:v:6:y:1995:i:1:p:35-90

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References

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  1. Braga, Carlos A. Primo & Safadi, Raed & Yeats, Alexander, 1994. "NAFTA's Implications for EastAsian exports," Policy Research Working Paper Series 1351, The World Bank.
  2. J. MUYSKENS & C. de Neubourg, 1986. "Introduction," Discussion Papers (REL - Recherches Economiques de Louvain) 1986031, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. Kilkenny, Maureen & Robinson, Sherman, 1990. "Computable general equilibrium analysis of agricultural liberalization: Factor mobility and macro closure," Journal of Policy Modeling, Elsevier, vol. 12(3), pages 527-556.
  4. Brown, D.K., 1992. "The Impact of a North American Free Trade Area: Applied General Equilibrium Models," Working Papers 311, Research Seminar in International Economics, University of Michigan.
  5. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521319867, April.
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  10. de Melo, Jaime & Robinson, Sherman, 1989. "Product differentiation and the treatment of foreign trade in computable general equilibrium models of small economies," Journal of International Economics, Elsevier, vol. 27(1-2), pages 47-67, August.
  11. de Melo, Jaime & Robinson, Sherman, 1990. "Productivity and externalities : models of export led growth," Policy Research Working Paper Series 387, The World Bank.
  12. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-51, September.
  13. Venables, Anthony J., 1985. "Trade and trade policy with imperfect competition: The case of identical products and free entry," Journal of International Economics, Elsevier, vol. 19(1-2), pages 1-19, August.
  14. Corden, W.M., 1984. "The normative theory of international trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 2, pages 63-130 Elsevier.
  15. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, April.
  16. Richard Baldwin, 1989. "The Growth Effects of 1992," NBER Working Papers 3119, National Bureau of Economic Research, Inc.
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  19. Devaragan, Shantayanan & Lewis, Jeffrey D. & Robinson, Sherman, 1990. "Policy lessons from trade-focused, two-sector models," Journal of Policy Modeling, Elsevier, vol. 12(4), pages 625-657.
  20. Robinson, Sherman, 1989. "Multisectoral models," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 18, pages 885-947 Elsevier.
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Citations

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Cited by:
  1. Scott McDonald & Karen Thierfelder, 2005. "Impact of Switching Production to Bioenergy Crops: The Switchgrass Example January 2005," Working Papers 2005002, The University of Sheffield, Department of Economics, revised Jan 2005.
  2. Wang, Zhi, 1997. "China and Taiwan access to the World Trade Organization: implications for U.S. agriculture and trade," Agricultural Economics, Blackwell, vol. 17(2-3), pages 239-264, December.
  3. McDonald, Scott & Robinson, Sherman & Thierfelder, Karen, 2008. "Asian Growth and Trade Poles: India, China, and East and Southeast Asia," World Development, Elsevier, vol. 36(2), pages 210-234, February.
  4. Kym Anderson & Mari Pangestu, 1998. "Structural Changes in a Reforming World Economy: Implications for Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(3), pages 85-113.
  5. Warwick J McKibbin & K K Tang, 1998. "The Global Economic Impacts of Trade and Financial Reform in China," Departmental Working Papers 1998-08, The Australian National University, Arndt-Corden Department of Economics, revised Sep 1998.
  6. Xinshen Diao & Eugenio Díaz-Bonilla & Sherman Robinson, 2003. "Scenarios for Trade Integration in the Americas," Economie Internationale, CEPII research center, issue 94-95, pages 33-51.
  7. Coyle, William T. & Wang, Zhi, 1998. "Open Regionalism In Apec: Impacts On U.S. Agriculture And Trade," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20981, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Plummer, Michael G., 2006. "Toward Win-Win Regionalism in Asia: Issues and Challenges in Forming Efficient Trade Agreements," Working Papers on Regional Economic Integration 5, Asian Development Bank.
  9. Jayatilleke S. Bandara & Wusheng Yu, 2007. "Agricultural trade liberalization in the Asia-Pacific region with specific reference to preferential trade agreements - scenario and impact analysis," STUDIES IN TRADE AND INVESTMENT, in: Studies in Trade and Investment - AGRICULTURAL TRADE - PLANTING THE SEEDS OF REGIONAL LIBERALIZATION IN ASIA, volume 60, pages 131-162 United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  10. Sherman Robinson & Zhi Wang & Will Martin, 2002. "Capturing the Implications of Services Trade Liberalization," Economic Systems Research, Taylor & Francis Journals, vol. 14(1), pages 3-33.
  11. Robinson, Sherman & Lewis, Jeffrey D., 1996. "Partners or predators? : the impact of regional trade liberalization on Indonesia," Policy Research Working Paper Series 1626, The World Bank.
  12. Karen Thierfelder & Scott McDonald, 2012. "Globe v1: A SAM Based Global CGE Model using GTAP Data," Departmental Working Papers 39, United States Naval Academy Department of Economics.
  13. Rodriguez, U-Primo E., 2008. "Impacts of the Free Trade Area of the Pacific (FTAAP) on Production, Consumption, and Trade of the Philippines," Discussion Papers DP 2008-20, Philippine Institute for Development Studies.
  14. Philip D. Adams & Mark Horridge & Brian Parmenter & Xiao-Guang Zhang, 1998. "Long-run Effects on China of APEC Trade Liberalisation," Centre of Policy Studies/IMPACT Centre Working Papers g-130, Victoria University, Centre of Policy Studies/IMPACT Centre.
  15. McDonald, Scott & Robinson, Sherman & Thierfelder, Karen, 2006. "Impact of switching production to bioenergy crops: The switchgrass example," Energy Economics, Elsevier, vol. 28(2), pages 243-265, March.
  16. Ballard, Charles L. & Cheong, Inkyo, 1997. "The effects of economic integration in the Pacific Rim: A computational general equilibrium analysis," Journal of Asian Economics, Elsevier, vol. 8(4), pages 505-524.

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