Regional Trade Agreements in East Asia: Will They Be Sustainable?
AbstractSearching for sustainable regional trade agreements (RTAs) for East Asia, we quantitatively evaluated the likely impact of proposed East Asian RTA strategies─(i) the AFTA (a being-left-alone strategy), (ii) an ASEAN Hub RTA (a hub-and-spoke type of overlapping RTA strategy), (iii) the AFTA vs a China-Japan-Korea RTA (a duplicating or competing RTA strategy), (iv) an ASEAN+3 RTA (an expansionary RTA strategy)─on the East Asian economies and the world economy with respect to consumption, production, volume of trade, and terms of trade effect by applying a multi-country and multi-sector CGE model. We found that there was no perfectly Pareto improving RTA strategy among the four different scenarios proposed for East Asia relative to the existing AFTA. However, the expansionary ASEAN+3 RTA can be a sustainable Pareto efficient policy option because the members’ gains were significantly positive enough with more evenly distributed gains between members. The effects on world welfare were also positive enough and the negative effect on nonmembers was not very significant. More interestingly, if the East Asian countries are willing to cooperate with their Pacific Basin partners to form an APEC level of RTA, the evolution toward a global trade bloc can be counted as a Pareto improvement for East Asian economies in every aspect we measure.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5068.
Date of creation: Feb 2008
Date of revision:
regional trade agreements; sustainability; Pareto efficiency; CGE model; East Asia;
Other versions of this item:
- Innwon Park, 2009. "Regional Trade Agreements in East Asia: Will They Be Sustainable? ," Asian Economic Journal, East Asian Economic Association, vol. 23(2), pages 169-194, 06.
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- F15 - International Economics - - Trade - - - Economic Integration
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-08 (All new papers)
- NEP-INT-2008-03-08 (International Trade)
- NEP-OPM-2008-03-08 (Open Economy Macroeconomics)
- NEP-SEA-2008-03-08 (South East Asia)
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