Free Trade in East Asia : A Computer Simulation Analysis by Using GTAP model

概要

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This paper analyzes the economic impact of trade liberalization in East Asia by using GTAP model. The GTAP model is a multiregional, computable general equilibrium model accompanied with the database of world economy. Using the latest version of GTAP model, we will give computer simulations on the effects of FTAs in East Asia. We first make a basic scenario to find out the effects of the removal of import tariffs and nontariff barriers on all the commodities within NAFTA and AFTA. Then we proceed to four different scenarios. This paper evaluates the economic effects of trade liberalization not only on East Asian economies as a whole (ASEAN plus 3 FTA) but also on the subsets of these East Asian economies (three patterns of ASEAN plus 1 FTAs). The simulation results show that trade liberalization in East Asia improves the welfare for ASEAN members as well as for China, Japan and Korea. The more favorable results are found for member countries under ASEAN plus 3 FTA than ASEAN plus 1 FTAs. We can conclude that the removal of trade barriers among East Asian countries could encourage trade diversion, especially with countries outside the region. The effects of the FTAs on terms of trade and outputs are different between the member countries. These effects depend on their comparative advantage, initial economic size and the rate of protection on trade.