Impacts of FTAs in East Asia: CGE Simulation Analysis

Abstract

In light of the recent movement toward regional integration through bilateral/plurilateral FTAs in East Asia, this paper attempts to estimate the impacts of several FTA scenarios in East Asia, using a CGE model. Although most previous simulation studies on the impacts of FTAs focus only on the liberalization of trade in goods, our paper attempts to consider other possible aspects of FTAs such as various trade and investment facilitation and technical assistance to developing countries in the region. Our results suggest that the economic effects of FTAs with a larger number of members are likely to be greater. Moreover, for the establishment of FTAs among countries such as ASEAN+3, ASEAN+6, and APEC, a high quality of trade liberalization including the agricultural sector is essential. Furthermore, it is vital for an agreement to be comprehensive, covering not only intraregional trade liberalization but also other elements such as facilitation measures and technical assistance. The larger the coverage, in terms of membership and contents, the greater the benefits accrued to the members.

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