Included in the protection estimates are the tariff equivalent of non-tariff barriers for agriculture, and NTB equivalents for industrial products only for the major OECD economies (US, Japan, and EU). While the some NTBs for the US and EU related to textile quotas and anti-dumping could be obtained from the GTAP data, only statutory tariff rates were available for Japan. Because no Japanese NTBs were included. this protection structure indicated that the US and EU protect themselves much more heavily against Japanese products than Japan does against US and EU products. To compensate for the absence of NTB information for Japan, we have incorporated additional information on the _ad valorem_ equivalent of Japanese NTBs, drawn from estimates provided in Sazanami, Urata, and Kawai (1995)." The import protection rates show substantial variations by sector and region. The high protection rates for agriculture and food products in the EU, Japan, and Korea & Taiwan reflect the high non-tariff barriers. The pre-URA average tariff rate across all goods averages 10-13 percent for Indonesia and China, 20 percent for the Philippines, and 32 percent for Thailand, although there is a great deal of sectoral variation in the rates.

The domestic tax rates presented in the second section of Table 5 indicate that most regions subsidize agriculture, with a particularly large subsidy in the United States on grain production while in the EU, Japan, and Korea & Taiwan the subsidy is directed towards other agricultural products as well. The enormous export subsidy provided by the EU to grain exports (and to a lesser extent, to other agriculture as well) is quite noticeable. The prevalence of export taxes in the textiles and apparel in the developing economies are due to the Multifibre Agreement (MFA). In our model, we represent the MFA through export taxes levied in the _exporting_ economy, thereby implicitly assuming that the rents associated with the MFA accrue to the exporting nations, rather than being shared with the importers. The export-tax equilavent of the MFA ranges from 4-6 percent for textiles to 16-30 percent for wearing apparel in the Asian developing economies.

# **3. The APEC-CGE Model**

In this paper, APEC-centered regional integration is analyzed through the use of a multi-country computable general equilibrium (CGE) model. Such models are designed to quantify many of the economic forces accompanying regional integration that are considered in international trade theory."<sup>2</sup> The APEC-CGE model we have developed is in the tradition of recent multi-country CGE models developed to analyze the impact of the Uruguay Round of GATT negotiations and the impact of the North American Free Trade Agreement. I<sup>3</sup> " Their estimates, based on unit value index comparisons, suggest sizeable non-tariff protection across a wide range of industrial products. For our purposes, we have chosen to increase reported tariff and NTB rates by one-half of the NTB equivalent calculated by these authors, resulting in the higher average protection rates for Japan reported in Table 5.

**12** For a more complete discussion of the analytic and modeling issues related to analysis of free trade areas, and a discussion of earlier efforts for Asia, see Lewis, Robinson, and Wang (1995).

13 These models, in turn, have built on multi-country models developed to analyze the impact of the Tokyo Round of GATT - negotiations in particular, the multi-country CGE model developed by Whalley (1985). Our model starts from the WALRAS model developed at the OECD to analyze the impact of the current GATT negotiations on the major OECD countries (OECD, 1990) and the RUNS model described in Goldin, Knudsen, and van der Mensbrugghe (1993). See Hinojosa-Ojeda and Robinson (1992) and Brown (1992) for a review of NAFTA CGE models.

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