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GTAP Resource #2733

"Alternative Regional Integration Scenarios in East Asia and Structural Adjustments in Member Countries"
by Lee, Hiro and Dominique van der Mensbrugghe

Although East Asian countries were relatively inactive in signing free trade agreements (FTAs) until the end of 1990s, a large number of FTAs involving East Asian countries have been signed since the turn of the century. Because sectoral interests can exert significant influence on policy negotiations, the sectoral results would be particularly important for political economy considerations. The objective of this study is to compare welfare gains and sectoral adjustments resulting from various FTA scenarios in East Asia using a dynamic global CGE model. The RCA rankings of commodities with various FTA scenarios and those with the global trade liberalization are correlated to examine how "natural" each grouping would be.

Our preliminary findings are as follows. First, the greater the correlation between RCA rankings of commodities with a particular FTA scenario and those with the global trade liberalization scenario, the more likely the prospective member countries are natural trading partners and the smaller the extent of structural adjustments. Second, while agricultural liberalization will cause relatively large adjustments in a number of agricultural products in some member countries (particularly in Japan and Korea), exclusions of politically sensitive agricultural products from the FTA would significantly reduce the welfare gains for the member countries. Third, the ASEAN+3 and ASEAN+6 FTAs, with relatively large welfare gains and small structural adjustments, could be a facilitating intermediate step towards global free trade. Some of the smaller FTAs, such as the ASEAN-China and ASEAN-Korea FTAs, would result in large structural adjustments for ASEAN countries.

Resource Details (Export Citation) GTAP Keywords
Category: 2008 Conference Paper
Status: Published
By/In: Presented at the 11th Annual Conference on Global Economic Analysis, Helsinki, Finland
Date: 2008
Created: Lee, H. (4/15/2008)
Updated: Lee, H. (4/15/2008)
Visits: 3,631
- Preferential trading arrangements
- Asia (East)
- Asia (Southeast)

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