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Multilateral, Regional, and Bilateral Trade-Policy Options for the United States and Japan

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Author Info
Drusilla K. Brown (Tufts University)
Alan V. Deardorff (University of Michigan)
Robert M Stern (University of Michigan)

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Abstract

We have used the Michigan Model of World Production and Trade to simulate the economic effects on the United States, Japan, and other major trading countries/regions of the Doha Round of WTO multilateral trade negotiations and a variety of regional/bilateral free trade agreements (FTAs) involving the United States and Japan. We estimate that an assumed reduction of post-Uruguay Round tariffs and other barriers on agricultural and industrial products and services by 33 percent in the Doha Round would increase world welfare by $686.4 billion, with gains of $164.0 billion for the United States, $132.6 billion for Japan, and significant gains for all other industrialized and developing countries/regions. If there were global free trade with all post-Uruguay Round trade barriers completely removed, world welfare would increase by $2.1 trillion, with gains of $497.0 billion (5.5 percent of GNP) for the United States and $401.9 billion (6.2 percent of GNP) for Japan. Regional agreements such as an APEC FTA, an ASEAN Plus 3 FTA, and a Western Hemisphere FTA would increase global and member country welfare but much less so than the Doha multilateral trade round would. Separate bilateral FTAs involving Japan with Singapore, Mexico, Chile, and Korea and the United States with Chile, Singapore, and Korea would have positive, though generally small, welfare effects on the partner countries, but potentially disruptive sectoral employment shifts in some countries. There would be trade diversion and detrimental welfare effects on some nonmember countries for both the regional and bilateral FTAs analyzed. The welfare gains from multilateral trade liberalization are therefore considerably greater than the gains from preferential trading arrangements and more uniformly positive for all countries.

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Publisher Info
Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 490.

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Length: 33 Pages
Date of creation: 2002
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Handle: RePEc:mie:wpaper:490

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Related research
Keywords: WTO; Trade Liberalization;

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F15 - International Economics - - Trade - - - Economic Integration

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Hertel, Thomas W. & Terrie Walmsley & Ken Itakura, 2001. "Dynamic Effects of the "New Age" Free Trade Agreement between Japan and Singapore," GTAP Working Papers 823, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University. [Downloadable!]
  2. Thomas W. Hertel & Bernard M. Hoekman & Will Martin, 2002. "Developing Countries and a New Round of WTO Negotiations," World Bank Research Observer, Oxford University Press, vol. 17(1), pages 113-140.
  3. Brown, Drusilla K & Stern, Robert M, 2001. "Measurement and Modeling of the Economic Effects of Trade and Investment Barriers in Services," Review of International Economics, Blackwell Publishing, vol. 9(2), pages 262-86, May. [Downloadable!] (restricted)
    Other versions:
  4. Harrison, W Jill & Pearson, K R, 1996. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Computational Economics, Springer, vol. 9(2), pages 83-127, May.
    Other versions:
  5. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 1998. "Computational Analysis of the Accession of Chile to the NAFTA and Western Hemisphere Integration," Discussion Papers Series, Department of Economics, Tufts University 9820, Department of Economics, Tufts University. [Downloadable!]
    Other versions:
  6. Drusilla K. Brown & Alan V. Deardorff & Robert M Stern, 2001. "Impacts on NAFTA Members of Multilateral and Regional Trading Arrangements and Initiatives and Harmonization of NAFTA's External Tariffs," Working Papers 471, Research Seminar in International Economics, University of Michigan. [Downloadable!]
  7. Hertel, Thomas W. & Will Martin, 1999. "Would Developing Countries Gain from Inclusion of Manufactures in the WTO Negotiations?," GTAP Working Papers 397, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University. [Downloadable!]
  8. Drusilla K. Brown & Alan V. Deardorff & Robert M Stern, 2001. "CGE Modeling and Analysis of Multilateral and Regional Negotiating Options," Working Papers 468, Research Seminar in International Economics, University of Michigan. [Downloadable!]
    Other versions:
  9. Bernard Hoekman, 2000. "The next round of services negotiations: identifying priorities and options," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 31-52. [Downloadable!]
  10. Thomas W. Hertel, 2000. "Potential gains from reducing trade barriers in manufacturing, services and agriculture," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 77-104. [Downloadable!]
  11. Warwick McKibbin & Jong-Wha Lee & Inkyo Cheong, 2004. "A dynamic analysis of the Korea-Japan free trade area: simulations with the G-cubed Asia-Pacific model," International Economic Journal, Korean International Economic Association, vol. 18(1), pages 3-32, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  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. Mabel Cabezas, 2003. "Tratado de Libre Comercio Entre Chile y Estados Unidos: Revisión de Estudios que Cuantifican su Impacto," Working Papers Central Bank of Chile 239, Central Bank of Chile. [Downloadable!]
  3. Alan Deardorff & Robert Stern, 2007. "Issues of Manufactures Liberalization and Administered Protection in the Doha Round," Global Economy Journal, International Trade and Finance Association, vol. 5(4), pages 7. [Downloadable!]
  4. Robert M. Stern, 2002. "An Economic Perspective on Russia's Accession to the WTO," Working Papers 480, Research Seminar in International Economics, University of Michigan. [Downloadable!]
  5. Alan V. Deardorff & Robert M. Stern, 2004. "Enhancing the Benefits for India and Other Developing Countries in the Doha Development Agenda Negotiations," Working Papers 512, Research Seminar in International Economics, University of Michigan. [Downloadable!]
  6. Alan V. Deardorff & Robert M. Stern, 2003. "Enhancing the Benefits for Developing Countries in the Doha Development Agenda Negotiations," Working Papers 498, Research Seminar in International Economics, University of Michigan. [Downloadable!]
  7. Robert M. Stern, 2002. "An Economic Perspective on Russia's Accession to the WTO," William Davidson Institute Working Papers Series 472, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  8. Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2004. "Computational Analysis of the U.S FTA with the Southern African Customs Union (SACU)," Working Papers 514, Research Seminar in International Economics, University of Michigan. [Downloadable!]
  9. Drusilla Brown & Kozo Kiyota & Robert Stern, 2006. "An Analysis of the U.S.-SACU FTA Negotiations," Working Papers 545, Research Seminar in International Economics, University of Michigan. [Downloadable!]
  10. Nicolas Péridy, 2004. "The new U.S. trans-ocean free trade initiatives: estimating export and FDI potentials from dynamic panel data models," Economics Bulletin, Economics Bulletin, vol. 6(9), pages 1-12. [Downloadable!]
  11. ANDO Mitsuyo, 2009. "Impacts of FTAs in East Asia: CGE Simulation Analysis," Discussion papers 09037, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  12. Romulo Chumacero & Rodrigo Fuentes, 2004. "Chile's Free Trade Deals with the EU and the US: A Big Deal?," Econometric Society 2004 Far Eastern Meetings 661, Econometric Society. [Downloadable!]
  13. Kokko, Ari & Mathä, Thomas & Gustavsson Tingvall, Patrik, 2006. "Regional Integration And Trade Diversion In Europe," EIJS Working Paper Series 231, The European Institute of Japanese Studies.
  14. Rashmi Banga, 2005. "Trade and foreign direct investment in services: A review," Indian Council for Research on International Economic Relations, New Delhi Working Papers 154, Indian Council for Research on International Economic Relations, New Delhi, India. [Downloadable!]
  15. Rómulo A. Chumacero & Rodrigo Fuentes & Klaus Schmidt-Hebbel, 2004. "Chile’s Free Trade Agreements: How Big is The Deal?," Working Papers Central Bank of Chile 264, Central Bank of Chile. [Downloadable!]
  16. 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!]
    Other versions:
  17. Horst Siebert, 2007. "How Global Rules are established and stabilized," Kiel Working Papers 1388, Kiel Institute for the World Economy. [Downloadable!]
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