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Trans Pacific Stategic Economic Partnership With Japan, South Korea and China Integrate: General Equilibrium Approach

Author

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  • Todsadee Areerat
  • Hiroshi Kameyama
  • Shoichi Ito
  • Koh-en Yamauchi

Abstract

Problem statement: The Trans-Pacific Strategic Economic Partnership Agreement (TPP) is a high standard and broad based Free Trade Agreement that aims to integrate the economies of the Asia-Pacific region. Recently, the US is pressing Japan to join the group. Japan is considering joining the TPP because of the dual considerations of its own economy and the political situation in East Asia. While, South Korea has yet to agree to join the TPP over concerns that their agriculture will be seriously affected. In addition, Japan and the US are employing both military and economic strategies to isolate China. However, China has contacted those already participating in TPP negotiations and shares some common views with Japan and South Korea on agricultural issues. Therefore, in this study, we attempt to assess the possibility of reaching full trade liberalization or trade creation through the TPP with the addition of new member countries including Japan, Korea and China. Approach: A Computable General Equilibrium (CGE) or Global Trade Analysis Project (GTAP) model is used to evaluate the economic effects of a TPP agreement among TPP countries with trade creation. In this study, seven cases were created to distinguish the welfare and trade effects of policy changes. Results: We found that the new member countries among TPP countries with East Asia countries including Japan, South Korea and China would benefit from the FTA among member countries. They gain much more from the real GDP and welfare than the TPP agreement, particularly Vietnam and Korea. This is particularly a fact for trade in the meat product sectors between TPP with Japan, Korea and China, which most of them gain benefit. Conclusion: Therefore, the TPP would benefit both economies and welfare with the eliminate tariff rate.

Suggested Citation

  • Todsadee Areerat & Hiroshi Kameyama & Shoichi Ito & Koh-en Yamauchi, 2012. "Trans Pacific Stategic Economic Partnership With Japan, South Korea and China Integrate: General Equilibrium Approach," American Journal of Economics and Business Administration, Science Publications, vol. 4(1), pages 40-46, January.
    • Handle: RePEc:abk:jajeba:ajebasp.2012.40.46
    DOI: 10.3844/ajebasp.2012.40.46
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    References listed on IDEAS

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    1. Hanslow, Kevin, 2000. "A General Welfare Decomposition For Cge Models," Technical Papers 28724, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Hertel,Thomas W. (ed.), 1999. "Global Trade Analysis," Cambridge Books, Cambridge University Press, number 9780521643740.
    3. Dixit, Avinash, 1975. "Welfare effects of tax and price changes," Journal of Public Economics, Elsevier, vol. 4(2), pages 103-123, February.
    4. Herreros, Sebastián, 2011. "The Trans-Pacific Strategic Economic Partnership Agreement: a Latin American perspective," Comercio Internacional 4332, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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    1. Yuhong Sun & Yifei Mu & Yang Jun, 2016. "An Analysis of Interaction Effects of China–South Korea and China– Australia FTAs and the Expanding TPP," Naše gospodarstvo/Our economy, Sciendo, vol. 62(4), pages 12-22, December.
    2. Wainio, John & Dyck, John & Meade, Birgit Gisela Saager & Mitchell, Lorrarine & Zahniser, Steven & Arita, Shawn & Beckman, Jayson F. & Burfisher, Mary E., 2014. "Agriculture in the Trans-Pacific Partnership," Economic Research Report 188429, United States Department of Agriculture, Economic Research Service.
    3. Muhammad Aamir Khan & Naseeb Zada & Kakali Mukhopadhyay, 2018. "Economic implications of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Pakistan: a CGE approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-20, December.
    4. Chunding Li & Xin Lin & John Whalley, 2020. "Comparing Alternative China and US Arrangements with CPTPP," NBER Working Papers 26877, National Bureau of Economic Research, Inc.
    5. Hirokazu Akahori & Daisuke Sawauchi & Yasutaka Yamamoto, 2017. "Measuring the Changes of Greenhouse Gas Emissions Caused by the Trans-Pacific Partnership," Sustainability, MDPI, vol. 9(5), pages 1-12, April.
    6. Cheong, Inkyo, 2013. "Negotiations for the Trans-Pacific Partnership Agreement: Evaluation and Implications for East Asian Regionalism," ADBI Working Papers 428, Asian Development Bank Institute.

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