19 March 2018
WP308 | Trade Policy Options for ASEAN Countries and Their Regional Dialogue Partners: “Preference Ordering” Using CGE Analysis
Abstract
The withdrawal of the United States (US) from the Trans-Pacific Partnership (TPP) and Trump’s “America First” agenda have ignited a second round of interest in mega-free trade agreements (mega-FTAs) in the Asia Pacific region. Countries have been motivated to explore alternative trade policy options. Using national real gross domestic output (GDP) gains estimated by the GTAP model to construct “preference ordering” for ten Association of Southeast Asian Nations (ASEAN) and their six regional dialogue partners, this paper comes up with several findings. First, when multilateral agreements are not possible, countries are better off with a narrower regional trading agreement than without one. Second, in the region, RCEP has higher beneficial impacts than the CPTPP. Third, for dual track countries, that is countries that are negotiating both the CPTPP and the RCEP, implementing both agreements is better than each separately. Fourth, as expected, economic impacts of the CPPTP are lower than those of the original TPP12, but all CPPTP members will benefit although to different degrees. Fifth, economic impacts of open regionalism are higher than those of a closed and reciprocal one. Going forward, the paper argues that ASEAN countries and their regional dialogue partners need to adopt a “multi-track, multi-stage” approach to trade policy.
JEL CLASSIFICATION: F13, C68, F50
About the Authors
Xianbai Ji is a PhD Candidate at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore. He holds the prestigious Nanyang President’s Graduate Scholarship to conduct doctoral research. His main interests include international trade in Asia Pacific, European economy and regional integration, global economic governance, and international development. His articles feature regularly in the region’s newspapers and magazines such as Asia Europe Journal, The National Interest, The Diplomat, East Asia Forum, Global Times, The Business Times, BRINK Asia, Bangkok Post, Global Trade, and Sina World Weekly. He is a current affair commentator for MediaCorp and held a Visiting Fellowship at the European Union Centre in Singapore in 2016 and the Europa Visiting Fellowship at The Australian National University in 2017.
Dr Pradumna B. Rana is an Associate Professor of Economics at the Centre for Multilateralism Studies of the S. Rajaratnam School of International Studies, Nanyang Technological University (NTU), Singapore. He is an international economist with expertise in the areas of international macroeconomics, trade, and development issues focusing on Asia. He was the Senior Director of the Asian Development Bank’s (ADB) Office of Regional Economic Integration which spearheaded the ADB’s support for Asian economic integration. Prior to that, he held various senior positions at the ADB for many years. He has teaching and research experience at NTU, National University of Singapore, and the Tribhuvan University, Nepal. He obtained his PhD from Vanderbilt University where he was a Fulbright Scholar, and a Masters in Economics from Michigan State University and Tribhuvan University where he was a gold medallist. He has published widely in the areas of Asian economic development and integration, financial crises, and economic policy reforms in transition economies. These include 16 authored or edited books, over 25 chapters in books, and over 40 articles in international scholarly journals. His recently co-authored books are Jumpstarting South Asia: Revisiting Economic Reforms and Look East Policies (New Delhi, OUP), South Asia: Rising to the Challenge of Globalisation (World Scientific Press), and Asia and the Global Economic Crisis: Challenges in a Financially Integrated World (Palgrave Macmillan). His recently co-edited books are Pan-Asian Integration: Linking East and South Asia and National Strategies for Regional Integration: South and East Asian Case Studies.
Dr Chia Wai Mun is an Associate Professor of Economics at the Division of Economics, Nanyang Technological University (NTU). She obtained her Bachelor’s degree in Economics from the University of London with First Class Honours in 1996. She was then awarded the Datuk Paduka Hajjah Saleha Ali Academic Outstanding Award for her exceptional academic performance at international level in 1997. In 1998, with the support of the London School of Economics (LSE) Scholarship, she pursued her Master’s degree at LSE. In 2006, she graduated with a PhD degree from NTU. Prior to joining NTU, she was an industry analyst at the Federation of Malaysian Manufacturers. Her current research interests are international macroeconomics, economic integration in East Asia, and cost-benefit analysis. She is an Associate Editor to the Singapore Economic Review and Treasurer of the Economic Society of Singapore. She is also a research consultant to the ASEAN Secretariat. She has published widely in internationally reputable journals such as Applied Economics, World Economy, Journal of Asian Economics, Economic Record, and Journal of Economic Dynamics and Control. She also consulted various government agencies in Singapore including National Environment Agency, Land Transport Authority, Building and Construction Authority, Singapore Police Force, and Ministry of Community, Youth and Sports. In recognition of her contributions in research and teaching, she was awarded the National Day Commendation Award in 2011.
Changtai Li is a PhD candidate in Division of Economics of Nanyang Technological University (NTU). Prior to enrolling at NTU, he worked for one year as Research Associate in Division of Economics and the S. Rajaratnam School of International Studies at the same university. He holds a Masters of Science in Applied Economics from NTU and a Bachelor of Art from China University of Petroleum. He is interested in fields like international trade, econometrics, and financial economics.
Abstract
The withdrawal of the United States (US) from the Trans-Pacific Partnership (TPP) and Trump’s “America First” agenda have ignited a second round of interest in mega-free trade agreements (mega-FTAs) in the Asia Pacific region. Countries have been motivated to explore alternative trade policy options. Using national real gross domestic output (GDP) gains estimated by the GTAP model to construct “preference ordering” for ten Association of Southeast Asian Nations (ASEAN) and their six regional dialogue partners, this paper comes up with several findings. First, when multilateral agreements are not possible, countries are better off with a narrower regional trading agreement than without one. Second, in the region, RCEP has higher beneficial impacts than the CPTPP. Third, for dual track countries, that is countries that are negotiating both the CPTPP and the RCEP, implementing both agreements is better than each separately. Fourth, as expected, economic impacts of the CPPTP are lower than those of the original TPP12, but all CPPTP members will benefit although to different degrees. Fifth, economic impacts of open regionalism are higher than those of a closed and reciprocal one. Going forward, the paper argues that ASEAN countries and their regional dialogue partners need to adopt a “multi-track, multi-stage” approach to trade policy.
JEL CLASSIFICATION: F13, C68, F50
About the Authors
Xianbai Ji is a PhD Candidate at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore. He holds the prestigious Nanyang President’s Graduate Scholarship to conduct doctoral research. His main interests include international trade in Asia Pacific, European economy and regional integration, global economic governance, and international development. His articles feature regularly in the region’s newspapers and magazines such as Asia Europe Journal, The National Interest, The Diplomat, East Asia Forum, Global Times, The Business Times, BRINK Asia, Bangkok Post, Global Trade, and Sina World Weekly. He is a current affair commentator for MediaCorp and held a Visiting Fellowship at the European Union Centre in Singapore in 2016 and the Europa Visiting Fellowship at The Australian National University in 2017.
Dr Pradumna B. Rana is an Associate Professor of Economics at the Centre for Multilateralism Studies of the S. Rajaratnam School of International Studies, Nanyang Technological University (NTU), Singapore. He is an international economist with expertise in the areas of international macroeconomics, trade, and development issues focusing on Asia. He was the Senior Director of the Asian Development Bank’s (ADB) Office of Regional Economic Integration which spearheaded the ADB’s support for Asian economic integration. Prior to that, he held various senior positions at the ADB for many years. He has teaching and research experience at NTU, National University of Singapore, and the Tribhuvan University, Nepal. He obtained his PhD from Vanderbilt University where he was a Fulbright Scholar, and a Masters in Economics from Michigan State University and Tribhuvan University where he was a gold medallist. He has published widely in the areas of Asian economic development and integration, financial crises, and economic policy reforms in transition economies. These include 16 authored or edited books, over 25 chapters in books, and over 40 articles in international scholarly journals. His recently co-authored books are Jumpstarting South Asia: Revisiting Economic Reforms and Look East Policies (New Delhi, OUP), South Asia: Rising to the Challenge of Globalisation (World Scientific Press), and Asia and the Global Economic Crisis: Challenges in a Financially Integrated World (Palgrave Macmillan). His recently co-edited books are Pan-Asian Integration: Linking East and South Asia and National Strategies for Regional Integration: South and East Asian Case Studies.
Dr Chia Wai Mun is an Associate Professor of Economics at the Division of Economics, Nanyang Technological University (NTU). She obtained her Bachelor’s degree in Economics from the University of London with First Class Honours in 1996. She was then awarded the Datuk Paduka Hajjah Saleha Ali Academic Outstanding Award for her exceptional academic performance at international level in 1997. In 1998, with the support of the London School of Economics (LSE) Scholarship, she pursued her Master’s degree at LSE. In 2006, she graduated with a PhD degree from NTU. Prior to joining NTU, she was an industry analyst at the Federation of Malaysian Manufacturers. Her current research interests are international macroeconomics, economic integration in East Asia, and cost-benefit analysis. She is an Associate Editor to the Singapore Economic Review and Treasurer of the Economic Society of Singapore. She is also a research consultant to the ASEAN Secretariat. She has published widely in internationally reputable journals such as Applied Economics, World Economy, Journal of Asian Economics, Economic Record, and Journal of Economic Dynamics and Control. She also consulted various government agencies in Singapore including National Environment Agency, Land Transport Authority, Building and Construction Authority, Singapore Police Force, and Ministry of Community, Youth and Sports. In recognition of her contributions in research and teaching, she was awarded the National Day Commendation Award in 2011.
Changtai Li is a PhD candidate in Division of Economics of Nanyang Technological University (NTU). Prior to enrolling at NTU, he worked for one year as Research Associate in Division of Economics and the S. Rajaratnam School of International Studies at the same university. He holds a Masters of Science in Applied Economics from NTU and a Bachelor of Art from China University of Petroleum. He is interested in fields like international trade, econometrics, and financial economics.
