Asia-China Economic Integration will be Bright Even without TPP

Li Xin

No 332385, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: The World Trade Organization has failed. In December, the Doha Round is turning ten years old, with nothing to celebrate, and formal negotiations of the Round expired in 2005 without any agreement and informal negotiations stalled in 2008. So a recent initiative to deepen trade relations among the countries bordering the Pacific, the Trans-Pacific Partnership (TPP), has been greeted with much applause and welcome relief as a step in the right direction. But while the TPP should be recognized and applauded for what it will be - and agreement providing increased rules-based certainty in trading relations among TPP members- it does not include China, which its size, location and dynamism exert an inexorable gravitational pull that has made it Southeast Asia’s largest trading partner. The essential objective behind this paper is to discuss any region-wide FTA-series of linked agreements with variable coverage of members and issues. By using the recursive dynamic computable general equilibrium model, the two different scenarios are simulated against the baseline, one is for ASEAN+3/+6 FTA, the other is for TPP agreement. The preliminary result shows that, the TPP agreement without China will probably not change the fact that, markets and geography are the principal factors behind Southeast Asia’s economic integration with China. After all, trade and investment agreements can only facilitate market forces, not fight them. In the end, markets and geography will point Asia toward integrating first and only then will be in a position to converge with TPP.

Keywords: International Relations/Trade; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 13
Date: 2013
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