The Impacts of an East Asia FTA on Foreign Trade in East Asia

31 Pages Posted: 4 Jan 2004

See all articles by Shujiro Urata

Shujiro Urata

Waseda University-Graduate School of Asia-Pacific Studies

Kozo Kiyota

Keio University - Keio Economic Observatory

Date Written: December 2003

Abstract

This paper attempts to examine the impact of an East Asia FTA on trade patterns in East Asia by using a multi-sector computable general equilibrium model. The model used in this analysis is the standard GTAP model and GTAP database developed by Hertel (1997) and his colleagues of Purdue University. Our findings are summarized as follows: First, the impacts of an East Asia FTA on GDP and welfare of member countries are generally positive, while the impacts on non-members are negative. Second and surprisingly, the FTA does not seem to affect much on the patterns of comparative advantage or intra-industry trade. Third, production of the sectors with a comparative advantage increases. Fourth, unexpectedly exports of protected sectors increase, reflecting a shift in incentives from domestic sales to export sales. Finally, an East Asia FTA will promote regionalization in East Asia but it will not necessarily promote regionalization in AFTA.

Suggested Citation

Urata, Shujiro and Kiyota, Kozo, The Impacts of an East Asia FTA on Foreign Trade in East Asia (December 2003). NBER Working Paper No. w10173. Available at SSRN: https://ssrn.com/abstract=481445

Shujiro Urata (Contact Author)

Waseda University-Graduate School of Asia-Pacific Studies ( email )

1-21-1 Nishiwaseda
Shinjuku-ku, Tokyo 169-8050
Japan

Kozo Kiyota

Keio University - Keio Economic Observatory ( email )

Mita 2-15-45, Minato-ku
Tokyo, 108-8345
Japan

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