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Computational Analysis of the U.S FTA with the Southern African Customs Union (SACU)

Author

Listed:
  • Drusilla K. Brown

    (Tufts University)

  • Kozo Kiyota

    (Yokohama National University and University of Michingan)

  • Robert M. Stern

    (University of Michingan)

Abstract

We use the Michigan Model of World Production and Trade to assess the economic effects of the U.S. FTA being negotiated with the Southern African Customs Union (SACU). The model covers 18 economic sectors in each of 22 countries/regions and is based on Version 5.4 of the GTAP database for 1997 together with specially constructed estimates of services barriers and other data on sectoral employment and numbers of firms. The distinguishing feature of the model is that it incorporates monopolistic competition in the manufacturing and services sectors, including increasing returns and product variety. The modeling focus is on the effects of the bilateral removal of tariffs on agriculture and manufactures and services barriers. Rules of origin and other restrictive measures and the non-trade aspects of the U.S.-SACU FTA are not taken into account due to data constraints. The computational results indicate that the benefits of the bilateral FTA for the United States and the SACU are rather small in both absolute and relative terms. Far greater benefits could be realized if the United States and the SACU adopted unilateral free trade and especially if multilateral free trade was adopted by all countries/regions in the global trading system.

Suggested Citation

  • Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2004. "Computational Analysis of the U.S FTA with the Southern African Customs Union (SACU)," Working Papers 514, Research Seminar in International Economics, University of Michigan.
    • Handle: RePEc:mie:wpaper:514
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    File URL: http://fordschool.umich.edu/rsie/workingpapers/Papers501-525/r514.pdf
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    References listed on IDEAS

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    1. Drusilla K. Brown & Robert M. Stern, 1989. "U.S.-Canada Bilateral Tariff Elimination: The Role of Product Differentiation and Market Structure," NBER Chapters, in: Trade Policies for International Competitiveness, pages 217-254, National Bureau of Economic Research, Inc.
    2. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2003. "Multilateral, Regional and Bilateral Trade‐Policy Options for the United States and Japan," The World Economy, Wiley Blackwell, vol. 26(6), pages 803-828, June.
    3. J. Francois & H. van Meijl & F. van Tongeren, 2003. "Trade Liberalization and Developing Countries under the Doha Round," Tinbergen Institute Discussion Papers 03-060/2, Tinbergen Institute, revised 30 Aug 2003.
    4. Drusilla K. Brown & Robert M. Stern, 2009. "Computable General Equilibrium Estimates of the Gains from US-Canadian Trade Liberalization," World Scientific Book Chapters, in: Globalization And International Trade Policies, chapter 13, pages 425-481, World Scientific Publishing Co. Pte. Ltd..
    5. John Whalley & J. Clark Leith, 2003. "Competitive Liberalization and a US-SACU FTA," NBER Working Papers 10168, National Bureau of Economic Research, Inc.
    6. Harrison, W Jill & Pearson, K R, 1996. "Computing Solutions for Large General Equilibrium Models Using GEMPACK," Computational Economics, Springer;Society for Computational Economics, vol. 9(2), pages 83-127, May.
    7. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2001. "CGE Modeling and Analysis of Multilateral and Regional Negotiating Options," Discussion Papers Series, Department of Economics, Tufts University 0108, Department of Economics, Tufts University.
    8. World Bank, 2003. "World Development Indicators 2003," World Bank Publications - Books, The World Bank Group, number 13920, December.
    9. Hertel, Thomas W. & Will Martin, 1999. "Would Developing Countries Gain from Inclusion of Manufactures in the WTO Negotiations?," GTAP Working Papers 397, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    10. Jeffrey J. Schott (ed.), 2004. "Free Trade Agreements: US Strategies and Priorities," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 375, October.
    11. Thomas W. Hertel, 2000. "Potential gains from reducing trade barriers in manufacturing, services and agriculture," Review, Federal Reserve Bank of St. Louis, vol. 82(Jul), pages 77-104.
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    Cited by:

    1. Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2006. "Computational Analysis of the Menu of US‐Japan Trade Policies," The World Economy, Wiley Blackwell, vol. 29(6), pages 805-855, June.

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