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GTAP Resource #2505

"European Free Trade Areas as an alternative to Doha - Impacts of US, Russian and Chinese FTAs"
by Baltzer, Kenneth, Soren Frandsen and Hans Grinsted Jensen

This paper discusses possible bilateral alternatives to a multilateral trade agreement in the light of the difficulties of reaching a successful conclusion to the Doha round. We analyse the economic impacts of three envisioned regional Free Trade greements
(FTAs), between EU and USA, EU and China and EU and Russia, and compare them with the probable outcome of a Doha round. The analyses utilise a modified and updated version of the GTAP (Global Trade Analysis Project) Computable General Equilibrium (CGE) trade model together with the current database (version 6) based on the year 2001. We find that bilateral free trade agreements with Russia, China and the United States each serve as a viable EU alternative to the currently stalled multilateral Doha Round, with EU welfare gains estimated at US$ 13.4 bn., US$ 4.6 bn. and US$ 3.5 bn. respectively. However, bilateral agreements are clearly ‘second best’ in nature, as the benefits accrue to the trade agreement partners at the expense of the rest of the world. The global welfare impacts of the Russian, the Chinese and the US FTAs are respectively US$ 1.8 bn., US$ 9.1 bn. and US$ -2.7 bn. compared with a global outcome of the Doha round estimated at US$ 87 bn. We conclude that a multilateral agreement remains the preferred option.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Published
By/In: Institute of Food and Resource Economics. WP No. 2 2007
Date: 2007
Created: Jensen, H. (8/28/2007)
Updated: Batta, G. (8/28/2007)
Visits: 2,267
- Preferential trading arrangements

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