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Economic implications of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Pakistan: a CGE approach

Author

Listed:
  • Muhammad Aamir Khan

    (COMSATS Institute of Information Technology (CIIT)
    Sultan Qaboos University)

  • Naseeb Zada

    (Quaid-I-Azam University Islamabad)

  • Kakali Mukhopadhyay

    (Gokhale Institute of Politics and Economics
    McGill University)

Abstract

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is one of the recently negotiated multilateral free trade agreements which aims to establish a free trade agreement between 11 economies (after US exit) on both sides of the Pacific. The formation and implementation of this proposed partnership is a valid threat for other economies, particularly for Pakistan. Pakistan will likely to suffer from this agreement due to trade diversion of textile and apparels in favor of the CPTPP members. The reason can be extended in terms of the likely ‘yarn forward rule,’ according to which, it is obligatory for the CPTPP member economies to import all the components of manufactured products from other CPTPP member economies. So, the implementation of the CPTPP will have an impact on global supply chain of textile and apparels. With this backdrop, this study evaluates the likely impacts of the CPTPP on the regional trade flows and other macroeconomic aggregates of Pakistan using a global computable general equilibrium model. The economy-wide results show the proposed CPTPP will have a negative impact on Pakistan’s real GDP, sectoral exports and imports and at household level. However, if Pakistan joins CPTPP, there is an overall positive impact on Pakistan’s economy. Thus, keeping in view Pakistan’s ideal geographical and strategic location and its potential to be a transit economy with a junction of south Asia, west Asia and central Asia, this study suggests that Pakistan’s proposed entry to CPTPP will not only yield a wide gain to the region but will reduce the gap between poor and rich in Pakistan and hence will have a positive impact on overall income inequality in Pakistan.

Suggested Citation

  • Muhammad Aamir Khan & Naseeb Zada & Kakali Mukhopadhyay, 2018. "Economic implications of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on Pakistan: a CGE approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-20, December.
    • Handle: RePEc:spr:jecstr:v:7:y:2018:i:1:d:10.1186_s40008-017-0103-x
    DOI: 10.1186/s40008-017-0103-x
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    Citations

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    Cited by:

    1. Muhammad Zeshan, 2023. "Trade, Industry and Competition in Pakistan," PIDE-Working Papers 2023:15, Pakistan Institute of Development Economics.
    2. Tetsuji Tanaka & Jin Guo, 2020. "Realistic Specifications and Model Predictability: Testing the Performance of a Stochastic CGE Model with Regionally Correlated Yield Variability in the Wheat and Rice Sectors," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 8(1), pages 55-75, March.
    3. Khan, Muhammad Aamir, 2020. "Cross sectoral linkages to explain structural transformation in Nepal," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 221-235.
    4. Khan, Aamir & Walmsley, Terrie & Mukhopadhyay, Kakali, 2019. "Trade Liberalization and Income Inequality: The Case for Pakistan," Conference papers 333125, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Khan, Muhammad Aamir & Walmsley, Terrie & Mukhopadhyay, Kakali, 2021. "Trade liberalization and income inequality: The case for Pakistan," Journal of Asian Economics, Elsevier, vol. 74(C).
    6. Minh Doan Nguyen & Nga Le Thi Viet & Huy Dinh Tran Ngoc & Dat Pham Minh, 2021. "Vietnam’s Meat Import Market Under Impacts Of The European -Vietnam Free Trade Agreement And Quality Management Demand," Management, Sciendo, vol. 25(1), pages 99-117, January.
    7. Chunding Li & John Whalley, 2021. "Effects of the comprehensive and progressive agreement for trans‐pacific partnership," The World Economy, Wiley Blackwell, vol. 44(5), pages 1312-1337, May.
    8. Chunding Li & Xin Lin & John Whalley, 2020. "Comparing Alternative China and US Arrangements with CPTPP," NBER Working Papers 26877, National Bureau of Economic Research, Inc.
    9. Qingtun Kong & Masaaki Yamada & Chengcheng Yang & Haisong Nie, 2025. "Competition or complementarity? Assessing the interaction effects of RCEP and CPTPP on agricultural and non-agricultural trade flows," International Economics and Economic Policy, Springer, vol. 22(1), pages 1-31, February.
    10. Ur-Rashid, Hamid Haroon & Khan, Muhammad Aamir, 2024. "Standards and non-tariff barriers in trade – A case study of South Asia," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 427-437.
    11. Muhammad Aamir Khan & Alishba Tahir & Nabila Khurshid & Muhammad Iftikhar ul Husnain & Mukhtar Ahmed & Houcine Boughanmi, 2020. "Economic Effects of Climate Change-Induced Loss of Agricultural Production by 2050: A Case Study of Pakistan," Sustainability, MDPI, vol. 12(3), pages 1-17, February.

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    More about this item

    Keywords

    Trans-Pacific partnership; Growth; Inequality; Economy-wide framework;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
    • F10 - International Economics - - Trade - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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