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GTAP Resource #4495

"The Impact of a Free Trade Agreement (FTA) Between Major Asian Economies As a Policy Response to TTIP"
by Meyveci Doganay, Seda, Yasin Uzun and Selman Tokpunar

Many economists believe that Transatlantic Trade and Investment Partnership (TTIP) will rewrite the rules of the global economy and may have significant disadvantage on developing countries in terms of trade diversion and convergence of standards and national regulatory systems. Considering the incentives behind TTIP, there is an increasing possibility of China and other major Asian economies to develop their own Asian Free Trade Area. This paper analyses the initial economic impact of possible policy response by major Asian countries as signing a FTA against TTIP. When the recent economic integration efforts in Asia is considered, it is seen that the Regional Comprehensive Economic Partnership (RCEP) foresees a more broader and deeper integration than other FTA efforts. That’s why, in this study, the possible FTA in Asia is assumed to be between sixteeen RCEP members. A computable general equilibrium (CGE) analysis with static GTAP model is used to examine the economy-wide effects of FTA’s. Three basic scenarios are tested in the analysis. In the first scenario, the impact of TTIP on signing parties and other countries, Asian countries in particular, are tested. In the second and third scenarios, impact of a policy response of 16 RCEP countries as establishing an FTA in paralel with the TTIP is analysed. The second scenario includes 100% tariff reduction in industrial products and the third scenario includes 50% tariff reduction in agricultural products in addition to 100% tariff reduction in industrial products. The analysis results show that TTIP will have positive impact only on economies of EU and USA while all other countries worsen in terms of real GDP. On the other hand, in second and third scenarios, in which Asian countries sign a FTA simultaneously, the Asian countries signing FTA and USA are affected positively while EU and rest of the World are affected adversely.

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Created: Uzun, Y. (4/15/2014)
Updated: Uzun, Y. (6/30/2014)
Visits: 1,179
- Preferential trading arrangements
- Not Applicable

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Comments (1 posted)
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Posted by: Meyveci Doganay, Seda   4/15/2014 1:10:00 PM
the paper will be finalized and sent to you by next week. Abstract, author and keywords are final.