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Assessing the economic impacts of the EU-Singapore FTA with a dynamic general equilibrium model

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  • Zornitsa Kutlina-Dimitrova
  • Csilla Lakatos

Abstract

Negotiations for the EU-Singapore FTA were concluded on December 6, 2012. Given that this is the EU’s first FTA with an ASEAN member country and the second one with a major Asian trading partner after the conclusion of the EU-Korea FTA, this agreement paves the way for future FTAs with countries in the region. The goal of this paper is to quantify the economic impacts of the EU-Singapore FTA using a dynamic computable general equilibrium model. The resutls estimated in this paper suggest that the bilateral reduction of tariff and non-tariff barriers brings benefits for both sides: Singapore GDP is expected to increase by € 2.7 billion whereas the EU gains are assessed at € 550 million. In addition, EU exports to Singapore would rise by some € 1.4 billion and Singapore’s exports to the EU by some € 3.5 billion. In a complementary scenario, the current paper also assesses the value of this FTA as an insurance policy against any hypothetical tariffs hikes in Singapore to WTO bound levels. In such a “worst case” scenario, the EU-Singapore FTA will protect EU GDP from a decrease of € 350 million and prevents a loss of € 3.7 billion EU exports to Singapore. Copyright European Union 2014

Suggested Citation

  • Zornitsa Kutlina-Dimitrova & Csilla Lakatos, 2014. "Assessing the economic impacts of the EU-Singapore FTA with a dynamic general equilibrium model," International Economics and Economic Policy, Springer, vol. 11(3), pages 277-291, September.
    • Handle: RePEc:kap:iecepo:v:11:y:2014:i:3:p:277-291
    DOI: 10.1007/s10368-013-0262-7
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    References listed on IDEAS

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    1. Ianchovichina, Elena & McDougall, Robert, 2000. "Theoretical Structure Of Dynamic Gtap," Technical Papers 28723, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Decreux, Yvan & Fontagné, Lionel, 2011. "Economic Impact of Potential Outcome of the DDA," Conference papers 332090, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
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    Cited by:

    1. Paul Welfens & Tony Irawan, 2014. "Transatlantic trade and investment partnership: sectoral and macroeconomic perspectives for Germany, the EU and the US," International Economics and Economic Policy, Springer, vol. 11(3), pages 293-328, September.

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    More about this item

    Keywords

    F13; F14; C68;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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