# **Table 6: Impact of Global Free Trade, Uniform Tariffs and Iceberg Cost Reduction in a More Realistic Nine-Sector Model.**

## **All scenarios with: 4 CRTS and 5 IRTS sectors; Ten Regions; initial tariffs and trade imbalances; three factors of production where part of the third factor is sector specific; and intermediates with CES demand and elasticity of substitution = 0.5.**

## **Results are Hicksian equivalent variation as a percent of consumption.****

||1|2|**3**|**4**|**5**|**6**|**7**|**8**|**9**|**10**|**11**|**12**|**13**|**14**|**15**|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||**10% reduc**|**tion in ice**|**berg costs **|**10% reduct**|**ion in iceb**|**erg costs**|**Glo**|**bal Free Tr**|**ade**|**Glo**|**bal Free T**|**rade**|**Glo**|**bal Free Tr**|**ade**|
||||||||**Uni**|**form Tariff**|**: No**|**Uni**|**form tariff**|**: Yes**|**Uni**|**form Tariff**|**: No**|
||**Labor-L**|**eisure Cho**|**ice: No**|**Labor-Le**|**isure Choic**|**e: Yes**|**Labor-**|**Leisure Cho**|**ice: No**|**Labor-**|**Leisure Ch**|**oice: No**|**Labor-L**|**eisure Cho**|**ice: Yes**|
||**Armington **|**Krugman**|**Melitz**|**Armington **|**Krugman**|**Melitz **|**Armingto**|**n Krugman**|**Melitz **|**Armington**|**Krugman**|**Melitz **|**Armington**|**Krugman**|**Melitz**|
|**Region**|**σ(D,M) = 6.03***|**σ = 5.55***<br>|**σ=5.0; a=4.58**|***σ(D,M) = 6.04***|**σ = 5.55***<br>**σ**|**=5.0; a=4.58***|**σ = 8.00***|**σ = 5.81***|**σ=5.0; a=4.58***|<br>**σ = 6.88***|**σ = 5.88***|**σ=5.0; a=4.58**|*****<br>**σ = 8.03***|**σ = 5.83***|**σ=5.0; a=4.58***|
|Australia-New Zealand|3.3%|2.8%|2.9%|3.3%|2.9%|3.0%|0.6%|0.8%|0.9%|0.2%|0.1%|0.1%|0.6%|0.9%|1.0%|
|Canada|4.2%|4.8%|4.9%|4.2%|5.0%|5.1%|0.2%|0.4%|0.5%|0.1%|0.3%|0.3%|0.2%|0.5%|0.6%|
|China|4.0%|4.8%|4.6%|4.0%|5.2%|5.2%|0.3%|-1.4%|-2.4%|0.0%|0.5%|0.4%|0.3%|-1.2%|-2.2%|
|Japan|2.3%|3.0%|3.2%|2.3%|3.1%|3.3%|0.4%|1.2%|1.5%|0.1%|0.3%|0.4%|0.4%|1.3%|1.6%|
|Mexico-Chile-Peru|4.7%|4.9%|4.9%|4.6%|5.0%|5.1%|-0.1%|0.0%|0.0%|0.2%|0.3%|0.3%|-0.1%|0.0%|0.1%|
|Low Income NEC|7.1%|10.4%|11.0%|7.1%|11.6%|12.7%|-0.2%|0.1%|0.2%|-0.1%|1.4%|2.4%|-0.2%|0.6%|0.9%|
|Middle Income NEC|3.7%|3.7%|3.7%|3.7%|3.7%|3.8%|-0.2%|0.0%|0.1%|-0.2%|-0.1%|-0.1%|-0.2%|0.0%|0.2%|
|OECD NEC|2.6%|3.0%|3.1%|2.6%|3.2%|3.3%|0.4%|1.1%|1.2%|0.1%|0.4%|0.4%|0.4%|1.2%|1.4%|
|Philippines|5.2%|6.2%|6.4%|5.2%|6.3%|6.6%|0.1%|0.5%|0.7%|0.3%|0.6%|0.7%|0.1%|0.5%|0.7%|
|United States|2.0%|2.2%|2.2%|2.1%|2.3%|2.4%|0.4%|0.4%|0.5%|0.1%|0.1%|0.1%|0.4%|0.4%|0.5%|
|average for the World|2.96%|3.31%|3.36%|2.96%|3.47%|3.55%|0.24%|0.40%|0.41%|0.05%|0.22%|0.25%|0.24%|0.48%|0.51%|

* See table 3 for definitions of elasticities. **Source: Authors’ estimates**

# **Table 6a: the Feenstra ratio and Proportional Changes in the Terms-of-trade***

||1|**2**<br>**3**|**4**<br>**5**|**7**|**8**<br>**9**|**10**<br>**11**|**12**|**13**<br>**14**|**15**<br>**16**|**17**|**18**<br>**19**|**20**<br>**21**|**22**|**23**<br>**24**|**25**<br>**26**|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||**La**<br>**10%**|**bor-Leisure Ch**<br>**Reduction in Ice**|**oice: No**<br>**berg Costs**|**L**<br>**10%**|**abor-Leisure Ch**<br>**Reduction in Ic**|**oice: Yes**<br>**eberg Costs**|**L**|**abor-Leisure C**<br>**Global Free**<br>**Uniform Tari**|**hoice: No**<br>**Trade**<br>**ff: No**|**La**|**bor-Leisure Ch**<br>**Global Free T**<br>**Uniform Tarif**|**oice: No**<br>**rade**<br>**f: Yes**|**L**|**Global Free**<br>**Uniform Tari**<br>**abor-Leisure Ch**|**Trade**<br>**ff: No**<br>**oice: Yes**|
||**Armington**|**Krugman**|**Melitz**|**Armingto**|**n**<br>**Krugman**|**Melitz**|**Armingto**|**n**<br>**Krugman**|**Melitz**|**Armington**|**Krugman**|**Melitz**|**Armingto**|**n**<br>**Krugman**|**Melitz**|
|**Region**|**TOT**|**TOT**<br>**Feenstr**|**a**<br>**TOT**<br>**Feenstra**|**TOT**|**TOT**<br>**Feenstra**|**TOT**<br>**Feenstra**|**TOT**|**TOT**<br>**Feenstr**|**a TOT**<br>**Feenstra**|**TOT**|**TOT Feenstra**|**TOT**<br>**Feenstra**|**TOT**|**TOT**<br>**Feenstr**|**a TOT**<br>**Feenstra**|
|Australia-New Zealand|1.014|1.008 1.010|1.007 1.012|1.015|1.010 1.010|1.009 1.013|1.015|1.020 1.000|1.020 1.002|1.007|1.007 1.000|1.006 1.000|1.016|1.021 1.000|1.021 1.002|
|Canada|1.006|1.014 1.019|1.014 1.022|1.006|1.015 1.020|1.015 1.023|0.999|1.000 1.001|1.000 1.001|1.003|1.004 1.001|1.003 1.001|0.999|1.000 1.001|1.000 1.001|
|China|0.997|1.001 1.010|1.001 1.011|0.996|1.000 1.012|1.000 1.013|1.003|1.011 0.993|1.011 0.995|0.998|0.999 1.001|0.999 1.001|1.003|1.010 0.994|1.010 0.996|
|Japan|0.998|1.007 1.010|1.008 1.011|0.998|1.006 1.010|1.007 1.012|1.011|1.023 1.002|1.025 1.004|1.005|1.006 1.001|1.006 1.001|1.010|1.022 1.003|1.024 1.005|
|Mexico-Chile-Peru|1.009|1.017 1.018|1.017 1.023|1.009|1.018 1.019|1.017 1.024|0.995|0.995 0.999|0.995 1.000|1.005|1.005 1.000|1.005 1.001|0.995|0.995 1.000|0.995 1.000|
|Low Income NEC|1.011|1.044 1.021|1.045 1.050|1.012|1.050 1.023|1.053 1.058|0.977|0.983 1.000|0.978 1.008|0.986|1.017 0.995|1.027 1.021|0.977|0.987 1.001|0.984 1.014|
|Middle Income NEC|1.005|1.002 1.013|1.001 1.013|1.006|1.003 1.014|1.002 1.014|0.985|0.979 1.001|0.978 1.000|0.991|0.991 1.000|0.991 1.000|0.985|0.979 1.001|0.979 1.000|
|OECD NEC|0.998|0.997 1.010|0.997 1.010|0.998|0.996 1.011|0.996 1.011|1.003|1.005 1.003|1.006 1.003|1.005|1.004 1.001|1.003 1.001|1.003|1.005 1.003|1.006 1.003|
|Philippines|1.002|1.019 1.023|1.019 1.031|1.002|1.018 1.024|1.019 1.032|0.996|0.996 1.002|0.997 1.002|1.006|1.010 1.001|1.010 1.003|0.996|0.996 1.002|0.997 1.002|
|United States|0.991|0.983 1.011|0.984 1.010|0.990|0.983 1.012|0.983 1.010|1.016|1.010 1.000|1.010 1.000|1.006|1.003 1.000|1.002 1.000|1.016|1.010 1.000|1.009 1.000|

*See section 5 for a definition of these parameters. In the Armington model, the Feenstra ration = 1 in all cases. **Source: Authors estimates**

41