CGE Modeling and Analysis of Multilateral and Regional Negotiating Options

Drusilla Brown (), Alan Deardorff and Robert Stern

No 468, Working Papers from Research Seminar in International Economics, University of Michigan

Abstract: We have used the Michigan Model of World Production and Trade to simulate the economic effects on the United States, Japan, and other major trading countries/regions of: the Uruguay Round of multilateral trade negotiations completed in 1993-94; a prospective new round of WTO multilateral trade negotiations; and a variety of regional/bilateral free trade agreements (FTAs) involving the United States and Japan. We estimate that the Uruguay Round negotiations increased global economic welfare by $75.1 billion annually, with gains of $12.9 billion for the United States and $15.6 billion for Japan. An assumed reduction of all post-Uruguay Round tariffs on agricultural and industrial products and of all services barriers by 33 percent in a new WTO trade round is estimated to increase world welfare by $613.0 billion, with gains of $177.3 billion for the United States and $123.7 billion for Japan. If there were global free trade with all post-Uruguay Round trade barriers completely removed, then world welfare would increase by $1.9 trillion, with gains of $537.2 billion (5.9 percent of GNP) for the United States and $374.8 billion (5.8 percent of GNP) for Japan. Elimination of APEC-member country bilateral post-Uruguay Round tariffs on agricultural and industrial products and services barriers is estimated to increase world welfare by $764.4 billion, with gains of $294.7 billion for the United States and $283.1 billion for Japan and losses of $7.0 billion for the European Union/EFTA and $1.0 billion for South Asia. Separate bilateral FTAs involving Japan with Singapore, Mexico, South Korea, and Chile and an ASEAN Plus-3 FTA involving Japan, China/Hong Kong, and South Korea would have positive, though generally small, welfare effects, but potentially disruptive sectoral employment shifts in some member countries. Depending on the agreement, there may be detrimental welfare effects on some nonmembers. The welfare gains from multilateral trade liberalization are therefore considerably greater than the gains from preferential trading arrangements and more uniformly positive for all countries.

Pages: 51 Pages
Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Downloads: (external link)
http://www.fordschool.umich.edu/rsie/workingpapers/Papers451-475/r468.pdf

Related works:
Working Paper: CGE Modeling and Analysis of Multilateral and Regional Negotiating Options (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:468

Access Statistics for this paper

More papers in Working Papers from Research Seminar in International Economics, University of Michigan Contact information at EDIRC.
Bibliographic data for series maintained by FSPP Webmaster ().