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Economic Effects of Free Trade Agreements in Northeast Asia: CGE Analysis with the GTAP 9.0a Data Base

Author

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  • Enkhbayar Shagdar
  • Tomoyoshi Nakajima

    (Research Division, Economic Research Institute for Northeast Asia (ERINA)
    Research Division, Economic Research Institute for Northeast Asia (ERINA))

Abstract

Despite growing trade and economic relations among the countries in the Northeast Asian (NEA) region, there are only two bilateral free trade agreements in effect currently. The China–ROK Free Trade Agreement entered into force on 20 December 2015 and the Japan–Mongolia Economic Partnership Agreement (EPA) became effective on 7 June 2016. However, several EPAs and free trade agreements (FTAs) are under negotiation or have prospects to emerge among not only the countries in the region, but also surrounding regions and countries. An analysis of the economic effects of the ongoing FTA (China–Japan–Korea Trilateral Free Trade Agreement (CJK FTA)), and several other prospective FTAs—Northeast Asia Preferential Free Trade Agreement (NEA FTA); Northeast Asia plus the Eurasian Economic Union (EAEU) Preferential Free Trade Area (NEA+EAEU FTA); and Northeast Asia plus the Regional Comprehensive Economic Partnership (RCEP) plus the EAEU Preferential Free Trade Area (NEA+RCEP+EAEU FTA)—using the standard CGE Model and GTAP Data Base 9.0a revealed that all parties of the agreements will benefit from the formation of these free trade agreements, having welfare gains and real GDP expansions regardless of international capital mobility status—i.e. whether the capital is internationally mobile or not. Moreover, the results indicated that for the NEA region as a whole, the NEA FTA is preferable to the CJK FTA alone, and it would be even better off with the formation of wider free trade areas, such as with the other RCEP and EAEU members.

Suggested Citation

  • Enkhbayar Shagdar & Tomoyoshi Nakajima, 2018. "Economic Effects of Free Trade Agreements in Northeast Asia: CGE Analysis with the GTAP 9.0a Data Base," The Northeast Asian Economic Review, ERINA - Economic Research Institute for Northeast Asia, vol. 6(1), pages 37-53, July.
    • Handle: RePEc:eri:review:6:1:37-53
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    References listed on IDEAS

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    1. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    2. Sh. Enkhbayar & Tomoyoshi Nakajima, 2013. "Impacts of Mongolian FTAs with the Countries in Northeast Asia: CGE Analysis with the GTAP 8 Data Base," The Northeast Asian Economic Review, ERINA - Economic Research Institute for Northeast Asia, vol. 1(2), pages 43-67, December.
    3. Enkhbayar Shagdar & Otgonsaikhan Nyamdaa, 2017. "Impacts of Import Tariff Reforms on Mongolia's Economy: CGE Analysis with the GTAP 8.1 Data Base," The Northeast Asian Economic Review, ERINA - Economic Research Institute for Northeast Asia, vol. 5(1), pages 1-25, March.
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    2. Davaajargal Lkhagva & Zheng Wang & Changxin Liu, 2019. "Mining Booms and Sustainable Economic Growth in Mongolia—Empirical Result from Recursive Dynamic CGE Model," Economies, MDPI, vol. 7(2), pages 1-16, May.

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    More about this item

    Keywords

    Free trade; CGE analysis;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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