How do regional trade agreements change the risk exposure of the industrial chain?

This paper quantifies the impact of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on industrial chain risk exposure. In a general equilibrium model that incorporates input-output linkages, we consider both tariffs and digital trade costs, while distinguishing between intermediate and final goods. Based on the extended model, we utilize data from the CPTPP agreement text, the annexed tariff reduction schedules, and the OECD inter-country input-output tables to assess changes in external industrial chain risk exposure across countries and industries on both the supply and demand sides under tariff and digital trade barrier reductions induced by CPTPP. Our findings indicate that the implementation of the CPTPP will increase risk exposure levels on both the supply and demand sides across member countries, with growth in bilateral simple industrial chain exposures generally exceeding that of complex chains. At the industry level, industrial chain risk exposure exhibits strong national concentration, sectoral heterogeneity, and regional disparities. If China joins the CPTPP, this trend will be further intensified.