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The Impacts of an East Asia FTA on Foreign Trade in East Asia

Author

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  • Shujiro Urata
  • Kozo Kiyota

Abstract

This paper attempts to examine the impact of an East Asia FTA on trade patterns in East Asia by using a multi-sector computable general equilibrium model. The model used in this analysis is the standard GTAP model and GTAP database developed by Hertel (1997) and his colleagues of Purdue University. Our findings are summarized as follows: First, the impacts of an East Asia FTA on GDP and welfare of member countries are generally positive, while the impacts on non-members are negative. Second and surprisingly, the FTA does not seem to affect much on the patterns of comparative advantage or intra-industry trade. Third, production of the sectors with a comparative advantage increases. Fourth, unexpectedly exports of protected sectors increase, reflecting a shift in incentives from domestic sales to export sales. Finally, an East Asia FTA will promote regionalization in East Asia but it will not necessarily promote regionalization in AFTA.

Suggested Citation

  • Shujiro Urata & Kozo Kiyota, 2003. "The Impacts of an East Asia FTA on Foreign Trade in East Asia," NBER Working Papers 10173, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10173
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    File URL: http://www.nber.org/papers/w10173.pdf
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    References listed on IDEAS

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    1. Brown, Drusilla K & Stern, Robert M, 2001. "Measurement and Modeling of the Economic Effects of Trade and Investment Barriers in Services," Review of International Economics, Wiley Blackwell, vol. 9(2), pages 262-286, May.
    2. Ballard, Charles L. & Cheong, Inkyo, 1997. "The effects of economic integration in the Pacific Rim: A computational general equilibrium analysis," Journal of Asian Economics, Elsevier, vol. 8(4), pages 505-524.
    3. Peter A. Petri, 1993. "The East Asian Trading Bloc: An Analytical History," NBER Chapters,in: Regionalism and Rivalry: Japan and the United States in Pacific Asia, pages 21-52 National Bureau of Economic Research, Inc.
    4. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
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    Citations

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    Cited by:

    1. Mun Heng Toh, 2006. "Singapore's Perspectives on the Proliferation of RTAs in East Asia and Beyond," Global Economic Review, Taylor & Francis Journals, vol. 35(3), pages 259-284.
    2. Paul Vandoren, 2005. "Regional economic integration in South East Asia," Asia Europe Journal, Springer, vol. 3(4), pages 517-535, December.
    3. ANDO Mitsuyo, 2009. "Impacts of FTAs in East Asia: CGE Simulation Analysis," Discussion papers 09037, Research Institute of Economy, Trade and Industry (RIETI).
    4. Inkyo CHEONG & Jungran CHO, 2007. "Market Access in FTAs: Assessment Based on Rules of Origin and Agricultural Trade Liberalization," Discussion papers 07016, Research Institute of Economy, Trade and Industry (RIETI).
    5. Kawai, Masahiro & Wignaraja, Ganeshan, 2008. "Regionalism as an Engine of Multilateralism: A Case for a Single East Asian FTA," Working Papers on Regional Economic Integration 14, Asian Development Bank.
    6. Kawai, Masahiro & Zhai, Fan, 2009. "China-Japan-United States integration amid global rebalancing: A computable general equilibrium analysis," Journal of Asian Economics, Elsevier, vol. 20(6), pages 688-699, November.
    7. repec:wsi:gjexxx:v:01:y:2012:i:02:n:s2251361212500127 is not listed on IDEAS
    8. Hiro Lee & Dominique van der Mensbrugghe, 2007. "Regional Integration, Sectoral Adjustments and Natural Groupings in East Asia," OSIPP Discussion Paper 07E008, Osaka School of International Public Policy, Osaka University.
    9. Innwon Park, 2009. "Regional Trade Agreements in East Asia: Will They Be Sustainable? ," Asian Economic Journal, East Asian Economic Association, vol. 23(2), pages 169-194, June.
    10. Takashi YANO & Hiroyuki KOSAKA, "undated". "An International Input-Output Analysis on the Effects of Free Trade Agreements in Asia," EcoMod2004 330600163, EcoMod.
    11. Innwon Park, 2006. "East Asian Regional Trade Agreements: Do They Promote Global Free Trade?," Pacific Economic Review, Wiley Blackwell, vol. 11(4), pages 547-568, December.
    12. Gumilang, Howard & Mukhopadhyay, Kakali & Thomassin, Paul J., 2011. "Economic and environmental impacts of trade liberalization: The case of Indonesia," Economic Modelling, Elsevier, vol. 28(3), pages 1030-1041, May.
    13. Lee, Hiro & Owen, Robert F. & van der Mensbrugghe, Dominique, 2009. "Regional integration in Asia and its effects on the EU and North America," Journal of Asian Economics, Elsevier, vol. 20(3), pages 240-254, May.
    14. Shujiro Urata, 2004. "The Shift from "Market-led" to "Institution-led" Regional Economic Integration in East Asia in the late 1990s," Discussion papers 04012, Research Institute of Economy, Trade and Industry (RIETI).
    15. Ken Itakura & Hiro Lee, 2012. "Welfare Changes And Sectoral Adjustments Of Asia-Pacific Countries Under Alternative Sequencings Of Free Trade Agreements," Global Journal of Economics (GJE), World Scientific Publishing Co. Pte. Ltd., vol. 1(02), pages 1-22.
    16. Michael G. Plummer & Ganeshan Wignaraja, 2006. "The Post-Crisis Sequencing of Economic Integration in Asia: Trade as a Complement to a Monetary Future," Economie Internationale, CEPII research center, issue 107, pages 59-85.
    17. repec:ilo:ilowps:486388 is not listed on IDEAS
    18. 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.
    19. repec:rim:rimwps:12-07 is not listed on IDEAS

    More about this item

    JEL classification:

    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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