The Relative Significance of EPAs
in Asia-Pacific10 November 2015
Kenichi Kawasaki
GRIPS/JIIA/RIETI
29 October 2011

Overview
The relative significance of EPAs in Asia-Pacific•

TPP and RCEP are shown to complement each other rather than becompetitors toward the establishment of FTAAP.

•

Trade diversion effects will deteriorate the economic welfare of the nonmember economies of regional EPAs.

•Larger economic benefits are expected from NTMs reductions in addition
to tariff removals.

•ASEAN countries and others will primarily benefit from their own EPApolicy measures.

•East Asian economies would remain benefit largely from future tradeliberalization.
1

Estimated impacts of EPAs
Estimated economic impacts of trade liberalization are compared withbusiness as usual without liberalization at some time in the future.
Those will be achieved over medium-term, after around 10 years.
Economic impacts of trade liberalization
GDP
Withoit trade liberalization
With trade liberalization

Impacts (%)

Trade liberalization

Future_______________
Source: Author2Regional integration in Asia-Pacific
Negotiations on the Regional Comprehensive Economic Partnership(RCEP) began in 2013.
The members of the Trans-Pacific Partnership (TPP) have increased.
Framework of EPAs in Asia-Pacific
APECRCEP

Hong Kong, China
Chinese Taipei
RussiaChina
Korea
TPPUSCanada
MexicoChilePeru

Japan
Australia
New Zealand

Papua New Guinea

Indonesia
Philippines
Thailand

India

ASEAN
Burunei
Malaysia
Singapore
Viet Nam_______________
Source: Author’s compilation
3

Cambodia
Laos
MyanmarImpacts of Asia-Pacific EPAs: Japan
Higher levels of achievement in TPP including NTMs reductions.
Larger gains from RCEP by growing and large Asian markets.
Complementary benefits from FTAAP participating in TPP and RCEP.
Japan’s income gains from the Asia-Pacific EPAs
% of GDP
3.5
Tariff removals
3.0
Tariff removals and NTMs reductions
2.5
2.0
1.5
1.0
0.5
0.0
TPP12RCEPFTAAP________________
Sources: Kawasaki (2015), “The Relative Significance of EPAs in Asia-Pacific”, Journal of Asian Economics 394

Japan’s source of economic benefits
Japan’s own contribution will be relatively large in TPP.
China’s contribution will be major in RCEP.
Japan’s gains from FTAAP will largely be given by Japan an China.
Contributions to Japan’s income gains by economies%
100
Malaysia

USRussia

ChinaJapan806040200
TPP
Tariff+NTMs

RCEP
Tariff+NTMs

FTAAP
Tariff+NTMs________________
Sources: Kawasaki (2015), “The Relative Significance of EPAs in Asia-Pacific”, Journal of Asian Economics 395

Impacts of Asia-Pacific EPAs: US
Income gains from TPP mainly from NTMs reductions.
Income losses from RCEP due to trade diversion effects
Much larger economic benefits from FTAAP than from TPP.
US’ income gains from the Asia-Pacific EPAs
% of GDP
1.8
Tariff removals
1.6
Tariff removals and NTMs reductions
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0-0.2
TPP12RCEPFTAAP________________
Sources: Kawasaki (2015), “The Relative Significance of EPAs in Asia-Pacific”, Journal of Asian Economics 39
6

US’ source of economic benefits
Japan’s contribution to tariff removals will be large in TPP.
Meanwhile, the US’s own NTMs reductions will be significant.
Income gains from FTAAP will firstly be influenced by China.
Contributions to US’ income gains by economies%100Japan

MexicoRussia

USChina

806040200-20
TPP
Tariff+NTMs

RCEP
Tariff+NTMs

FTAAP
Tariff+NTMs________________
Sources: Kawasaki (2015), “The Relative Significance of EPAs in Asia-Pacific”, Journal of Asian Economics 397

Impacts of Asia-Pacific EPAs: China
Income losses from TPP due to trade diversion effects.
Large gains from RCEP, in which tariff removals remain important.
Further income gains from FTAAP expanding the members of EPAs.
China’s income gains from the Asia-Pacific EPAs
% of GDP
7.0
Tariff removals
6.0
Tariff removals and NTMs reductions
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
TPP12RCEPFTAAP________________
Sources: Kawasaki (2015), “The Relative Significance of EPAs in Asia-Pacific”, Journal of Asian Economics 398

China’s source of economic benefits
Income gains from FTAAP will primarily be driven by own measures.
India’s contribution in RCEP and Russia’s contribution in FTAAP willbe noted.
Contributions to China’s income gains by economies%100JapanIndiaUSRussiaChina806040200
TPP
Tariff+NTMs

RCEP
Tariff+NTMs

FTAAP
Tariff+NTMs________________
Sources: Kawasaki (2015), “The Relative Significance of EPAs in Asia-Pacific”, Journal of Asian Economics 39
9Impacts of Asia-Pacific EPAs: Chinese Taipei
Income losses from TPP due to trade diversion effects.
Much larger income losses from RCEP.
Significant economic benefits from FTAAP.
Chinese Taipei’s income gains from the Asia-Pacific EPAs
% of GDP
12.0
10.0

Tariff removals
Tariff removals and NTMs reductions

8.0
6.04.02.00.0-2.0-4.0TPP12RCEPFTAAP________________
Sources: Kawasaki (2015), “The Relative Significance of EPAs in Asia-Pacific”, Journal of Asian Economics 3910Impacts of Asia-Pacific EPAs: EUMay benefit from the spill-over effects of NTMs reductions.
However, income losses from FTAAP will be sizable compared withexpected gains from TTIP and EU-Japan EPA.
EU’s income losses from the Asia-Pacific EPAs
% of GDP0.2
0.0-0.2-0.4-0.6

Tariff removals
Tariff removals and NTMs reductions-0.8TPP12RCEPFTAAP________________
Sources: Kawasaki (2015), “The Relative Significance of EPAs in Asia-Pacific”, Journal of Asian Economics 39
11

Significance of domestic reforms in FTAAPIn ASEAN countries and others, contributions through their own
initiatives will be much larger than those by partners in FTAAP.
Contributions to income gains from FTAAP by own policies%
1008060

Tariff removals
Tariff removals and NTMs
reductions

40
200________________
Sources: Kawasaki (2015), “The Relative Significance of EPAs in Asia-Pacific”, Journal of Asian Economics 3912Tariff concessions in East Asia
Tariff concessions in East Asian EPAs have not substantially beenhigh enough in effect.
Comparison of tariff concessions%
100

Numbers of commodoties

8060
40
200

________________
Sources: Authors’ estimates
13Average tariff rates