Global EPAs Consortium

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I.         Motivation

The progress of bilateral and multi-regional Economic Partnership Agreements (EPAs) has accelerated since the beginning of this year. In the Asia-Pacific, the first round of China-Japan-Korea Free Trade Agreement (FTA) negotiations was held in March. The first round of formal negotiations on Regional Comprehensive Economic Partnership (RCEP) [was also taken place in May]. Japan is likely to join the Trans-Pacific Partnership (TPP) negotiations as early as July. Meanwhile, the three largest advanced economies - the United States, the European Union and Japan - will soon commence negotiations on a giant triangle of EPAs.

The Leaders of the TPP negotiations have announced a “common vision to establish a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st-century challenges” for the purpose of “forging close linkages among their economies, enhancing their competitiveness, benefitting their consumers and supporting the creation and retention of jobs, higher living standards, and the reduction of poverty in their countries.”

Many stakeholders-consumers, workers and others associated with specific industries, investors, and of course policy makers-have questions and concerns about the likely effects of these new agreements on incomes, jobs, trade and investment. The Global EPAs Research Consortium will facilitate trade policy decision making by assembling high quality information and quantitative studies on the potential impacts of EPAs. Although governments usually find it awkward to estimate outcomes while the negotiations are underway[1] they too are likely to benefit. The active involvement of researchers from varied backgrounds can promote the balanced discussion and refinement of policy decisions.

 

II.       Research goals

The consortium will focus on improving the estimation of changes in economic welfare, production, trade, investment and job creation at both the macro and sector levels. Several specific issues are of special interest.

-          Estimating tariff concessions. The effects of new agreements should be distinguished from those agreed in the past but not yet implemented. As of June 2012, there were nearly 50 agreements in negotiation or implementation across the region[2]. These are likely to involve substantial reductions in tariffs but will still leave significant barriers behind. Careful estimates are needed of the reductions already scheduled in order to create an accurate baseline for assessing future liberalization.

-          Estimating non-tariff barriers. Liberalization of non-tariff measures (NTMs) and rules affecting services and investment will be important elements of future agreements. To estimate their effects, barriers with and without potential agreements need to be quantified. Better estimates are needed for the Ad Valorem Equivalents (AVEs) of NTMs and restrictiveness indexes for services trade. It will be also necessary to estimate “actionable levels” of NTMs and possible spill-over effects of NTM liberalization on countries not involved in the negotiations.

-          Improving computable general equilibrium (CGE) models. Models employed in trade policy simulations need to be further developed, for example by incorporating dynamic mechanisms to reflect trade and investment liberalization. Among other improvements, the introduction of firm heterogeneity into CGE model has recently been highlighted-this factor may help to explain past underestimation of the empirical effects of trade liberalization.

 

III.      Activities

-          Collecting and publishing data, parameter estimates and modeling methods . The Consortium will collect information for online dissemination, for example, on the website of the Global Trade Analsis Project (GTAP), which has played a central role in providing data and models for quantitative studies of EPAs (http://www.gtap.agecon.purdue.edu/), and on the specialized webstite that was recently established on the impacts of the TPP and other EPAs in the Asia-Pacific region (http://www.asiapacifictrade.org).

-          Organizing workshops and symposia. Occasional meetings will be held to present research results, review data needs, and compare estimation methods. These meetings will provide opportunities to discuss the implications of EPAs and to exchange technical insights on the means used to estimate them.

-          Sponsoring research projects. As resources permit, the consortium will launch or encourage projects to fill information gaps. Such projects are now planned on tariffs and NTMs in the Asia-Pacific region. The resulting information would be made available online and improved on a regular basis.

-         Disseminating research findings. While the Consortium will typically focus on technical issues, the results of its work will generate insight into the effects of trade agreements. These insights should be made accessible to the public. The Consortium will encourage members to report findings in a non-technical form and will seek ways collect and publish such information online and in other formats.

 

IV.      Organization

The Research Consortium will be led by a steering group. The members of the consortium will be selected from senior researchers from throughout the region and other interested countries.

-       Steering group (to be confirmed and added)

Kenichi Kawasaki, Adjunct Fellow, Japan Institute of International Affairs
Peter Petri, Professor, Brandeis University

-       Members

The steering group will invite the participation of senior researchers from academic and research institutions, business and government in the work of the Consortium. Those invited will be conducting significant research on the measurement of trade barriers and/or the quantitative effects of EPAs. The aim is to establish an internationally diverse membership.



[1] The Japanese government released the estimated impacts of Japan's TPP participation on 15 March 2013 when the Prime Minister Abe expressed the intention of TPP participation. However, Japan too will probably not want to generate many estimates in the short run.

[2] See Petri, P., Plummer, M., and Zhai, F. (2012), The Trans-Pacific Partnership and Asia-pacific Integration: A Quantitative Assessment, Policy Analysis in International Economics 98, Peterson Institute for International Economics, Washington DC, November 2012

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Discussion Forum

Going It Alone in the Asia-Pacific: Regional Trade Agreements Without the United States
Peter A. Petri (PIIE), Michael G. Plummer (Johns Hopkins University and East-West Center), Shujiro Urata (Waseda University) and Fan Zhai (Former Managing Director, China Investment Corporation)


The Linkage between Services and Manufacturing in the US economy
Sherry M. Stephenson, Senior Fellow, International Centre for Trade and Sustainable Development


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Hugh Stephens, Vice-chair, CANCPEC


After the TPP: What’s Next for Canada in Asia?
Hugh Stephens, Vice-chair, CANCPEC