Overlapping Free Trade Agreements of Singapore-USA-Japan: A Computational Analysis
The proliferation of overlapping free trade agreements (FTA) in the recent years has led to hub-and-spokes (HAS) throughout the world. Being avid subscribers to FTAs, many countries in the Asia-Pacific region including the USA, Japan, Singapore, South Korea, Thailand and Australia have become trade hubs to their partners who are in turn relegated to spoke status. In this paper, we question whether being a hub is welfare optimal for a small and open economy like Singapore compared to membership in a single bilateral FTA or a multi- member free trade zone. Within this context, we use a computable general equilibrium model to examine the welfare implications of the triangular trade relationship of the USA, Singapore and Japan. This is facilitated by the Japan- Singapore Economic Partnership Agreement, the USA-Singapore Free Trade Agreement, and a hypothetical USA-Japan Economic Partnership Agreement. The analysis is extended to incorporate “super-hub” effects; that is, the spoke countries can be trade hubs in other HAS systems. The experiment reveals that hub status generates positive welfare gain and is the highest Singapore can get from the trade configurations considered. Meanwhile, Japan loses more than the USA when both are relegated to spoke status. These findings prove robust under different market structures and production technologies, deeper economic integration, “super-hub” effects, as well as, uncertainty in the key model parameters and the extent of trade liberalisation shocks.
|Date of creation:||Aug 2007|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.fas.nus.edu.sg/ecs/scape/index.html|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kowalczyk, C. & Wannacott, R.J., 1992. "Hubs and Spokes , and Free Trade in the Americas," UWO Department of Economics Working Papers 9209, University of Western Ontario, Department of Economics.
- Wonnacott, Ronald J, 1996. "Free-Trade Agreements: For Better or Worse?," American Economic Review, American Economic Association, vol. 86(2), pages 62-66, May.
- Piermartini, Roberta & Teh, Robert, 2005. "Demystifying modelling methods for trade policy," WTO Discussion Papers 10, World Trade Organization (WTO), Economic Research and Statistics Division.
- 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.
- Matthias Busse, 2000. "The hub and spoke approach of EU trade policy," Intereconomics- Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 35(4), pages 153-154, July.
- Das, Gouranga Gopal & Andriamananjara, Soamiely, 2004.
"Hub-and-Spokes Free-Trade-Agreements in the Presence of Technology Spillovers: An Application to the Western Hemisphere,"
15870, United States International Trade Commission, Office of Economics.
- Gouranga Gopal Das & Soamiely Andriamananjara, 2006. "Hub-and-Spokes Free Trade Agreements in the Presence of Technology Spillovers: An Application to the Western Hemisphere," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(1), pages 33-66, April.
- Scott Bradford & Robert Z. Lawrence, 2004. "Has Globalization Gone Far Enough: The Costs of Fragmented Markets," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 349.
- Carsten Kowalczyk & Ronald J. Wonnacott, 1992. "Hubs and Spokes, and Free Trade in the Americas," NBER Working Papers 4198, National Bureau of Economic Research, Inc.
- Werner Antweiler & Daniel Trefler, 2002.
"Increasing Returns and All That: A View from Trade,"
American Economic Review,
American Economic Association, vol. 92(1), pages 93-119, March.
- Werner Antweiler & Daniel Trefler, 2000. "Increasing Returns and All That: A View From Trade," NBER Working Papers 7941, National Bureau of Economic Research, Inc.
- Venables, Anthony J, 1987. "Trade and Trade Policy with Differentiated Products: A Chamberlinian-Ricardian Model," Economic Journal, Royal Economic Society, vol. 97(387), pages 700-717, September.
- Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, March.
- Malcolm, Gerard, 1998. "Adjusting Tax Rates in the GTAP Data Base," GTAP Technical Papers 315, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
- Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2004.
"Computational Analysis of the Menu of U.S.-Japan Trade Policies,"
Hi-Stat Discussion Paper Series
d04-63, Institute of Economic Research, Hitotsubashi University.
- 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, 06.
- Drusilla K. Brown & Kozo Kiyota & Robert M. Stern, 2004. "Computational Analysis of the Menu of U.S.-Japan Trade Policies," Working Papers 515, Research Seminar in International Economics, University of Michigan.
- Ronald J. Wonnacott, 1975. "Canada's Future in a World of Trade Blocs: A Proposal," Canadian Public Policy, University of Toronto Press, vol. 1(1), pages 118-130, Winter.
- Francois, Joseph, 1998. "Scale Economies and Imperfect Competition in the GTAP Model," GTAP Technical Papers 317, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Joaquim Oliveira Martins & Stefano Scarpetta & Dirk Pilat, 1996. "Mark-Up Ratios in Manufacturing Industries: Estimates for 14 OECD Countries," OECD Economics Department Working Papers 162, OECD Publishing.
- Deltas, George & Desmet, Klaus & Facchini, Giovanni, 2006. "Hub-and-Spoke Free Trade Areas," CEPR Discussion Papers 5960, C.E.P.R. Discussion Papers.
- DeVuyst, Eric A. & Preckel, Paul V., 1997. "Sensitivity analysis revisited: A quadrature-based approach," Journal of Policy Modeling, Elsevier, vol. 19(2), pages 175-185, April.
- Arndt, Channing, 1996. "An Introduction to Systematic Sensitivity Analysis via Gaussian Quadrature," GTAP Technical Papers 305, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
When requesting a correction, please mention this item's handle: RePEc:sca:scaewp:0711. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.