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GTAP Resource #3357

"A General Equilibrium Analysis of the China-ASEAN Free Trade Agreement"
by Tsigas, Marinos and Zhi Wang

We simulate the effects of the China-ASEAN free trade area (CAFTA) with a recently developed global trade, applied general equilibrium (AGE) framework. This AGE model is different from other comparative-static models in two important aspects: we explicitly models transnational supply chains and export processing zones in China.

The CAFTA was signed in November 2002. China and ASEAN began lowering barriers to trade in 2005. Under the CAFTA, China, Indonesia, Thailand, the Philippines, Malaysia, Singapore and Brunei removed almost all tariffs in January 1, 2010. Some agricultural products and parts for motor vehicles and heavy machinery will still face tariffs in 2010, but those will gradually be phased out. ASEAN’s newest members — Cambodia, Laos, Vietnam and Myanmar — will gradually reduce tariffs in coming years and must eliminate them entirely by 2015.

Our analysis will focus at the sectoral and macro implications of CAFTA for China, selected ASEAN countries (i.e., Malaysia, the Philippines, Singapore, Thailand, Vietnam and Indonesia) and their trading partners (e.g., Japan, Korea, India, the European Union and the United States). Our data contains 26 countries or regions and 41 aggregate sectors. Producers operating in processing zones in China and Mexico are modeled as separate and different from producers in the rest of the economy.

We review the literature and compare earlier analyses of CAFTA with this analysis. We also compare our simulated effects to simulations that we run with an AGE model that ignores transnational supply chains and export processing zones in China.

Resource Details (Export Citation) GTAP Keywords
Category: 2010 Conference Paper
Status: Published
By/In: Presented at the 13th Annual Conference on Global Economic Analysis, Penang, Malaysia
Date: 2010
Created: Tsigas, M. (4/15/2010)
Updated: Batta, G. (4/19/2010)
Visits: 4,426
- Preferential trading arrangements
- Economic development
- Asia (East)
- Asia (Southeast)

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