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NAFTA's Implications for EastAsian exports

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  • Braga, Carlos A. Primo
  • Safadi, Raed
  • Yeats, Alexander
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    Abstract

    Several studies have quantified the influence of the North American Free Trade Agreement (NAFTA) and the earlier Canada - United States Free Trade Agreement on member countries. Less attention has been paid to their effects on nonmembers. The authors try to quantify NAFTA's third-party effects on East Asia using a partial equilibrium trade model and a gravity flow model. They identify and focus on East Asian export sectors that are especially at risk of trade diversion. Their results suggest that the NAFTA-induced trade diversion losses could range from $380 million to $700 million. The larger figure represents less than 1 percent of East Asia's nonoil exports to the United States. Their analysis also indicates that losses would be concentrated in a few sectors - such as textiles, clothing, and ferrous metals - where high U.S. trade barriers exist. A larger share of Hong Kong and Macau trade would be diverted than trade in other East Asian economies because textiles and clothing represent a larger share of their exports. Economies specializing in such products as machinery and equipment (Singapore) would have relatively little trade diverted. East Asia's trade losses might be reduced by roughly half once the results of the Uruguay Round are implemented because that will lower the preference margins NAFTA members can extend to each other. To put things in perspective: the trade losses East Asian economies might incur because of NAFTA are roughly 1 percent of the gains they will receive from successful implementation of the Uruguay Round results.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1351.

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    Date of creation: 31 Aug 1994
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    Handle: RePEc:wbk:wbrwps:1351

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    Keywords: Economic Theory&Research; Environmental Economics&Policies; Trade Policy; Trade and Regional Integration; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT;

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    References

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    1. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-53, February.
    2. Horacio E. Sobarzo, 1992. "A General Equilibrium Analysis of the Gains from Trade for the Mexican Economy of a North American Free Trade Agreement," The World Economy, Wiley Blackwell, vol. 15(1), pages 83-100, 01.
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    14. Brown, D.K. & Deardorff, A.V. & Stern, R.M., 1991. "A North American Free Trade Agreement: Analytical Issues and A Computational Assessment," Working Papers 289, Research Seminar in International Economics, University of Michigan.
    15. Brada, Josef C & Mendez, Jose A, 1985. "Economic Integration among Developed, Developing and Centrally Planned Economies: A Comparative Analysis," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 549-56, November.
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    Cited by:
    1. 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.
    2. Lewis, Jeffrey D. & Robinson, Sherman & Zhi Wang, 1995. "Beyond the Uruguay Round : the implications of an Asian free trade area," Policy Research Working Paper Series 1467, The World Bank.

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