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Australia's Involvement in Free Trade Agreements: An Economic Evaluation

  • Mahinda Siriwardana

The establishment of Free Trade Agreements (FTAs) has become an integral part of Australia's current trade policy. Australia has signed FTAs with Singapore, Thailand and the US. Possibilities for similar agreements with the Association of South East Asian Nations (ASEAN), China, and Japan are being explored. This paper examines the effects of FTAs on the Australian economy and on the trading partners, drawing lessons from simulations of a number of free trade agreements. The simulations are undertaken using the Global Trade Analysis Project (GTAP) model. By simulating the GTAP multi-country computable general equilibrium (CGE) model, the paper provides quantitative evidence concerning the welfare impact of FTAs with special reference to trade creation and trade diversion. Examining responses of various production sectors identifies the structural changes that may take place in the economy over the long run. The findings may shed light on the debate over the potential incentives to participate in multilateral trade liberalization.

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Article provided by Taylor & Francis Journals in its journal Global Economic Review.

Volume (Year): 35 (2006)
Issue (Month): 1 ()
Pages: 3-20

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Handle: RePEc:taf:glecrv:v:35:y:2006:i:1:p:3-20
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  1. Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2005. "Computational Analysis of the US FTAs with Central America, Australia and Morocco," The World Economy, Wiley Blackwell, vol. 28(10), pages 1441-1490, October.
  2. Siriwardana, Mahinda, 2004. "An Analysis of the Impact of Indo-Lanka Free Trade Agreement and Its Implications for Free Trade in South Asia," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 19, pages 568-589.
  3. Peter J. Lloyd & Donald Maclaren, 2004. "Gains and Losses from Regional Trading Agreements: A Survey," The Economic Record, The Economic Society of Australia, vol. 80(251), pages 445-467, December.
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