Kenichi Kawasaki

Visiting Research Fellow, Economic and Social Research Institute (ESRI), Cabinet Office
Consulting Fellow, Research Institute of Economy, Trade and Industry (RIETI)
Managing Director and Senior Political Analyst, Economic Research Department, Financial & Economic Research Center, NOMURA SECURITIES CO., LTD.

This paper discusses the relative significance of a Free Trade Area of the Asia-Pacific (FTAAP) at the macro and sectoral levels. The impacts of trade liberalization and facilitation measures in an FTAAP are studied using a Computable General Equilibrium (CGE) model of global trade. The dynamic aspects of capital formation and productivity improvements are incorporated into a standard static model based on the most updated version of a global trade database. Real GDP of the APEC economies will be boosted on average by 1.9 percent by trade liberalization measures and 0.4 percent by trade facilitation measures, respectively. However, because of differences in the trade structure of the economies, the relative macroeconomic benefits of the economies from several regional trade agreements are shown to differ largely. Moreover, the relative significance of negative impacts in sensitive sectors such as agriculture may also vary according to several scenarios of trade liberalization.