Computational Analysis of the Us Ftas with Central America, Australia and Morocco

50 Pages Posted: 29 Dec 2005

See all articles by Drusilla K. Brown

Drusilla K. Brown

Tufts University - Department of Economics

Kozo Kiyota

Keio University - Keio Economic Observatory

Robert M. Stern

University of Michigan at Ann Arbor - Department of Economics

Abstract

We use the Michigan Model of World Production and Trade to assess the economic effects of the US bilateral FTAs negotiated with Central America, Australia and Morocco. The model covers 18 economic sectors in each of 22 countries/regions and is based on version 5.4 of the GTAP database for 1997 together with specially constructed estimates of services barriers and other data on sectoral employment and numbers of firms. The distinguishing feature of the model is that it incorporates imperfect competition in the manufacturing and services sectors, including monopolistic competition, increasing returns and product variety. The modelling focus is on the effects of the bilateral removal of tariffs on agriculture and manufactures and services barriers. Rules of origin and other restrictive measures and the non-trade aspects of the FTAs are not taken into account due to data constraints. The computational results indicate that the benefits of bilateral FTAs for the United States and partner countries are rather small in both absolute and relative terms, and that far greater benefits could be realised if the United States and its FTA partners adopted unilateral free trade and especially if multilateral free trade was adopted by all countries/regions in the global trading system.

Suggested Citation

Brown, Drusilla K. and Kiyota, Kozo and Stern, Robert M., Computational Analysis of the Us Ftas with Central America, Australia and Morocco. The World Economy, Vol. 28, No. 10, pp. 1441-1490, October 2005. Available at SSRN: https://ssrn.com/abstract=857830 or http://dx.doi.org/10.1111/j.1467-9701.2005.00743.x

Drusilla K. Brown (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States
617-627-3096 (Phone)
617-627-3917 (Fax)

Kozo Kiyota

Keio University - Keio Economic Observatory ( email )

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

Robert M. Stern

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
313-764-2373 (Phone)
313-763-9181 (Fax)

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