The impact of Free Trade
Agreements in the OECD
The impact of an EU-US FTA, EU-Japan FTA
and EU- Australia/New Zealand FTA
Concept

Client: Ministry of Economic Affairs, the Netherlands

ECORYS Nederland BV

Nora Plaisier
Dr. Koen Berden
Prof. dr. Joe Francois
Afke Mulder

Rotterdam, 2 November 2009

ECORYS Nederland BV
P.O. Box 4175
3006 AD Rotterdam
Watermanweg 44
3067 GG Rotterdam
The Netherlands

T +31 (0)10 453 88 00
F +31 (0)10 453 07 68
E netherlands@ecorys.com
W www.ecorys.com
Registration no. 24316726

ECORYS Macro & Sector Policies
T +31 (0)10 453 87 53
F +31 (0)10 452 36 60

TB/NP AC19865report

Table of contents

List of used abbreviations

9

1 Introduction

11

2 Main economic indicators: baseline
2.1 Income and production
2.2 Trade
2.3 Investment
2.4 Inflation
2.5 Employment
2.6 Overview of all trade partners

13
13
14
15
17
18
18

3 Context: EU and Netherlands main economic indicators
3.1 EU main economic indicators
3.2 Existing EU trade agreements
3.3 Netherlands: economic performance
3.4 Selection of 20 sectors for the impact analysis

21
21
22
24
25

4 Context: EU-US Economic relations
4.1 US main economic indicators
4.2 EU-US trade relations
4.2.1 Trade in Goods
4.2.2 Trade in Services
4.3 EU-US investment relations
4.3.1 FDI flows
4.3.2 FDI stocks
4.4 EU-US Bilateral Agreements and Co-operation

27
27
28
28
29
29
29
30
30

5 Context: EU-Japan Economic relations
5.1 Japan main economic indicators
5.2 EU-Japan trade relations
5.2.1 Trade in Goods
5.2.2 Trade in Services
5.3 EU-Japan investment relations
5.3.1 FDI flows
5.3.2 FDI stocks
5.4 EU-Japan Bilateral Agreements and Co-operation

33
33
34
34
35
36
36
36
37

6 Context: EU-Australia/New Zealand Economic relations

39

TB/NP AC19865report

6.1 Australia and New Zealand main economic indicators
6.2 EU-Australia/New Zealand trade relations
6.2.1 Trade in Goods
6.2.2 Trade in Services
6.3 EU- Australia/New Zealand investment relations
6.3.1 FDI flows
6.3.2 FDI stocks
6.4 EU- Australia/New Zealand Bilateral Agreements and Co-operation

39
40
40
41
42
42
43
43

7 The model
7.1 Computable General Equilibrium: The Multi-Region Trade Model
7.1.1 CGE model specifications
7.1.2 Model variables and results
7.1.3 Dynamics of the model and short- and long-run effects
7.1.4 Third country effects
7.1.5 CGE modelling assumptions and limitations
7.2 Model inputs for the trade and investment liberalisation scenarios
7.2.1 Sector specification for model analysis
7.2.2 Country specification for model analysis
7.2.3 Scenario specifications

45
45
45
48
48
49
49
50
50
50
51

8 Modelling results: Impact of an EU-US FTA
8.1 Macroeconomic effects of the EU-US FTA
8.2 Sectoral effects of the EU-US FTA
8.2.1 Sectoral impact on the Netherlands and the EU26
8.2.2 Sectoral impact on the US
8.2.3 Sectoral impact on third countries: selection of most significant
results

57
58
60
60
65

9 Modelling results: Impact of an EU-Japan FTA
9.1 Macroeconomic effects
9.2 Sectoral effects
9.2.1 Sectoral impact on the Netherlands and the EU
9.2.2 Sectoral impact on Japan
9.2.3 Sectoral impact on third countries: selection of most significant
results

69
70
73
73
76

66

78

10 Modelling results: Impact of an EU-Australia/New Zealand FTA
10.1 Macroeconomic effects
10.2 Sectoral effects
10.2.1 Sectoral impact on the Netherlands and the EU26
10.2.2 Sectoral impact on Australia/New Zealand
10.2.3 Sectoral impact on third countries: selection of most significant
results

81
82
84
84
87
89

11 Synthesis and Conclusions
11.1 Synthesis of findings: macro results
11.1.1 Macro results for the Netherlands and the EU

91
91
91

11.1.2 Macro results for FTA partner countries and third countries
11.2 Synthesis of findings: sectoral results
11.2.1 Sectoral results for the Netherlands and the EU
11.2.2 Sectoral results for the FTA partners and third countries
11.3 Conclusions
Annex
Annex A
Annex B
Annex C
Annex D
Annex E

Terms of Trade effects
Impact of an EU-US FTA
Impact of an EU-Japan FTA
Impact of an EU-Aus/NZ FTA
The baseline

TB/NP AC19865report

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100
108
116
124

List of used abbreviations

AVE

Ad Valorem Equivalents

AUS

Australia

BRIC

Brasil, Russia, India and China

CGE

Computable General Equilibrium

DDA

Doha Development Agenda

EU

European Union

EU26

EU27 excluding the Netherlands

FMT

Francois, van Meijl and van Tongeren

FTA

Free Trade Agreement

GCC

Gulf Cooperation Council

GDP

Gross Domestic Product

JP

Japan

LR

Long Run

MAD

Market Access Database

MFN

Most Favoured Nation

NL

the Netherlands

NTB

Non-tariff Barrier

NZ

New Zealand

P4

Pacific-4

ROW

Rest of World

SR

Short Run

TEC

Transatlantic Economic Council

US

United States

WTO

World Trade Organisation

The impact of Free Trade Agreements in the OECD

9

10

The impact of Free Trade Agreements in the OECD

1 Introduction

This study is an impact assessment of three possible FTAs in the OECD area: an EU-US
FTA, an EU-Japan FTA and an EU-Australia/New Zealand FTA. The study separates the
impact on the Netherlands from the rest of the EU (EU26), while also looking at the
impact on third countries. The scenarios selected for assessing the impact of these three
FTAs are ambitious, as the interest is in the potential impact of ambitious bilateral FTAs.
In assessing their impact, it is important to keep in mind that the results are based on a
situation without a possible Doha agreement in the WTO.
The structure of this report is as follows: chapters 2 to 6 present an overview of the
context of these three FTAs: current main economic indicators of the partners to the
FTAs, existing FTAs and other trade agreements, and the existing trade and investment
relations between the partners for each of the three FTAs. Chapter 7 sets out the CGE
model that was used for this study, also specifying the assumptions that have been made.
Chapter 8, 9 and 10 present the impact of, respectively, an EU-US FTA, an EU-Japan
FTA and an EU-Australia/NZ FTA in detail. The final chapter provides the synthesis and
conclusions.

The impact of Free Trade Agreements in the OECD

11

2 Main economic indicators: baseline

Source of this Chapter is OECD Factbook 2009: Economic, Environmental and Social
Statistics - ISBN 92-64-05604-1 - © OECD 2009. The currency that was used in this
OECD Factbook was the US dollar. In this Chapter all the data is recalculated to Euros, a
2007 average is used to do this, the 2007 average was 0.731. The OECD Factbook uses
for the EU 27 trade figures in which intra-EU trade in included. So in this Chapter EU 27
data is intra-EU trade included. For AUS + NZ, the data includes intra AUS and NZ
trade.

2.1 Income and production
Table 2.1

Main Income and Production indicators – 2007
EU27

NL

US

JP

AUS 1)

NZ 1)

AUS +
NZ

GDP (Billion Euros, current prices and

10,851

469

10,039

3,138

581

84

664

21,877

28,656

33,232

24,566

27,444

20,034

26,184

2.9

3.5

2

2.1

4.4

3

N.A.

3)

39.8

43.7

4,875.2

47.9

38.4

N.A.

PPPs)
GDP per capita (Euros, current prices
and PPPs)
Real GDP growth (Annual growth in %)
Labour productivity (GDP per hour
worked)

34.9

2)

1) Data refer to fiscal year
2) Labour productivity for NL, US, JP, AUS and NZ is expressed in national currencies at constant prices.
3) This is EU 19. EU 19 is all EU Member States that are OECD Members. Labour productivity for zones are
based on GDP volumes converted to US dollars, using constant Purchasing Power Parities.

1

The exact 2007 average was 0.7305591 and the source is http://www.x-rates.com/d/EUR/USD/hist2007.html. In Annex I a
table and figure can be found with monthly averages over 2007.

The impact of Free Trade Agreements in the OECD

13

2.2 Trade
Table 2.2

Trade balance - 2007
EU27

NL

US

JP

AUS

NZ

AUS +
NZ

Trade in goods (Billion Euro)
Imports

3,833.9 (1)

307.8

1473.6

454.6

115. 3

22.6

Exports

3,747.8

(1)

348.3

849.2

(2)

521.8

103.1

19.7

122.7

Total trade

7,581.7

656.1

2,322.8

976.4

218.3

42.2

260.5

Balance

-86.1

40.5

-624.4

67.3

-12.3

-2.9

-15.2

48.2

137.9

Trade in services (Billion Euro)
Imports

1,470.4

84.2

378.1

149.3

39.1

9.1

Export

1,666.7

96.4

497.2

126.2

40.3

9.3

49.6

Total trade

3,137.1

180.6

875.3

275.5

79.4

18.4

97.8

Balance

196.3

12.2

119.1

-23.1

1.2

0.2

1.4

(1) Source: national statistical offices or customs of the European Union Member countries
(2) Free alongside ship

Figure 2.1

Trade in goods – billions Euros (2007)

8000
7000
6000
5000
4000
3000
2000
1000
0
-1000
EU27

NL
Imports

14

US
Exports

The impact of Free Trade Agreements in the OECD

Total trade

JP
Balance

AU + NZ

Figure 2.2

Trade in services – billions Euros (2007)

3500
3000
2500
2000
1500
1000
500
0
-500
EU27

NL

US

Imports
Table and Figure 2.1

Export

Total trade

JP

AU + NZ

Balance

Trade in goods and services – % of GDP (2007)

Trade in goods and

NZ

services (% of GDP)

AU

EU27

40.0%

JP

NL

70.6%2

US

US

14.7%

NL
EU27
0

20
EU27

40
NL

US

60
JP

AU

JP

16.8%

AUS

20.7%

NZ

29.0%

80
NZ

2.3 Investment
Table 2.3

FDI flows in billion Euro – 2007
EU 27

NL

US

JP

AUS

NZ

AUS + NZ

Inflows

788.5

72.7

173.5

16.5

17.2

2.1

19.3

Outflows

972.0

22.8

243.5

53.7

18.8

2.1

20.8

Balance

183.6

-49.9

69.9

37.3

1.5

0.0

1.5

2

OECD Definition: The rates shown in this table correspond to the average of imports and exports (of both
goods and services) at current prices as a percentage of GDP. The data are taken from national accounts
statistics compiled according to the 1993 System of National Accounts. Goods consist of merchandise
imports and exports. Services cover transport, travel, communications, construction, IT, financial, other
business, personal and government services, as well as royalties and license fees.

The impact of Free Trade Agreements in the OECD

15

Figure 2.3

FDI flows in billion Euro - 2007

1000
800
600
400
200
0
-200
EU27

Table 2.4

NL

US

JP

Inflows

Outflows

Balance

AU + NZ

FDI stocks in billion Euro - 2006
EU27

NL

US

JP

AUS

NZ

AUS +

Inward stocks

6,091.7

366.9

1,571.9

78.6

182.5

46.3

228.8

Outward stocks

6,755.8

525.2

2,144.9

328.4

166.2

9.1

175.2

NZ

Figure 2.4

FDI stocks in billion Euro - 2006

7000
6000
5000
4000
3000
2000
1000
0
EU27

NL
Inward stocks

16

US

JP

Outward stocks

The impact of Free Trade Agreements in the OECD

AU + NZ

Table and Figure 2.2

Gross fixed capital formation - % of GDP (2007)

30

Gross fixed capital

25

formation (% of GDP)

20
15
10
5

EU27

21.3 %

NL

20.0 %

US

18.4 %

JP

23.2 %

AUS *

27.7 %

NZ *

22.9 %

0
EU27

NL

US

JP

AU

NZ

* Data refer to fiscal year

2.4 Inflation
Table 2.5

Main Inflation indicators - 2007

CPI (Year 2000 = 100)

EU27

NL

US

(2)

116.3

120.4

98.1

123

119.6

2.8%

1.5%

2.7%

-0.7%

4.4 (1) %

4.3 (1) %

118.4

GDP deflator3 (annual growth in %)

JP

AUS

NZ

(1) Data refer to fiscal year
(2) HICP, source Eurostat

Figure 2.5

Inflation indicators - 2007

NZ
AU
JP
US
NL
EU27
-50

0

50
CPI

3

100

1 50

GDP deflator

The GDP deflator measures the price changes of goods and services produced by a country – including exports, and a
component to reflect price changes in imports- while the CPI measures the price changes of goods and services consumed
by households. Source: www.OECD.org

The impact of Free Trade Agreements in the OECD

17

2.5 Employment
Table 2.6

Main Employment indicators – 2007
EU27

NL

US

JP

AUS

NZ

years in employment)

65.4 %

74.1 %

71.8 %

70.7 %

72.9 %

75.4 %

Unemployment rate (a % of civilian labour force)

7.1 %

3.2 %

4.6 %

3.9 %

4.4 %

3.6 %

Employment rate (share of persons of 15 to 64

Figure 2.6

Main employment indicators - 2007

NZ
AU
JP
US
NL
EU 27

0

20

40

Employment rate

60

80

Unemployment rate

2.6 Overview of all trade partners
In Table 2.7, a short overview is given with some main indicators. In this overview the
trade partner blocks BRIC and RoW are also presented. Different data sources have been
used for this table than in the first part of the chapter, which can cause differences with
the data presented earlier. Note that data for the trade blocks (EU27, BRIC and RoW) are
generally not reported as one block and therefore the figures presented here are the sum
of the figures of the individual countries. This implies that in these numbers intra trade or
investment flows are included.

18

The impact of Free Trade Agreements in the OECD

Table 2.7

Some indicators for all trade partners, billions of Euros
EU27

NL

US

JP AUSs/NZ

BRIC

RoW

Nominal GDP (2007)

12,252

556

10,093

3,211

768

5,154

8,172

Import1) (2008)

1,668

361

1,580

557

165

1,379

4,446

Export (2008)

1)

1,408

398

949

570

159

1,663

4,647

Inflows (2006)

400

3

127

5

23

98

310

Outflows (2006)

418

17

158

37

17

53

205

Inward stocks (2006)

4,015

330

1,307

79

226

557

2,581

Outward stocks (2006)

4,697

477

1,742

33

175

241

1,930

Source: UNCTAD, Handbook of Statistics, 2008
Note: The currency that was used in this Handbook of Statistic was the US dollar. We used an exchange rate 0.73 (see footnote
1) to recalculate this to Euros.
1) For these indicators UN COMTRADE4 is used as a source. RoW is calculated as the sum of world exports minus the exports
of the other countries presented in this table. For world imports, we assumed the same value as for world exports, although
this statistically often differs.

4

http://comtrade.un.org/db/default.aspx

The impact of Free Trade Agreements in the OECD

19

3 Context: EU and Netherlands main economic
indicators

3.1 EU main economic indicators
Table 3.1

EU Main Economic Indicators-2007
Indicator

EU 27

Income and Production
GDP (Billion Euros, current prices and PPPs)

10,851

GDP per capita (Euros, current prices and PPPs)

21,877

Real GDP growth (Annual growth in %)
Labour productivity (in national currency at constant prices)

2.9
34.9

1)

Trade in goods
Imports (Billions of Euros)

3,833.9

Exports (Billions of Euros)

3,747.8

Total trade (Billions of Euros)

7,581.7

Balance of trade in goods (Billions of Euros)

-86.1

Trade in services
Imports of services (Billions of Euros)

1,470.4

Exports of services (Billions of Euros)

1,666.7

Total trade in services (Billions of Euros)

3,137.1

Balance of trade in services (Billions of Euros)

196.3

Trade
Trade in goods and services (% of GDP)

40.0%

Investment
Inflows FDI (Billions of Euros)

788.5

Outflows FDI (Billions of Euros)

972.0

Balance FDI (Billions of Euros)

183.5

Inward stocks 2006 (Billions of Euros)

6,755.9

Outward stocks 2006 (Billions of Euros)

6,091.6

Gross fixed capital formation (% of GDP)

21.3%

Inflation
CPI (Year 2000 = 100)

118.4

GDP deflation (Annual growth rate)

2.8%

Employment
Employment rate (share of persons of 15 to 64 years in employment)

65.4%

Unemployment rate (a percentage of civilian labour force)

7.1 %

Source: OECD Factbook 2009: Economic, Environmental and Social Statistics

The impact of Free Trade Agreements in the OECD

21

Note 1: The currency that was used in OECD Factbook was the US dollar. In this Table all the data is
recalculated to Euros, with a 2007 average of 0.73, see footnote 1.
Note 2: The OECD Factbook uses for the EU 27 trade figures in which intra-EU trade in included, EU 27 data is
intra-EU trade included.
1) This is EU 19. EU 19 is all EU Member States that are OECD Members. Labour productivity for zones are
based on GDP volumes converted to US dollars, using constant Purchasing Power Parities.

3.2 Existing EU trade agreements
The EU has concluded a wide variety of bilateral and bi-regional trade and trade-related
agreements with several regions and countries. Table 3.2 lists the main trade agreements
and agreements containing trade-related provisions and gives some details on each
agreement.
Table 3.2

EU trade agreements overview
FTAs, agreements with FTA provisions
(Entry into force), agreements under
negotiations or awaiting implementation

Details

EU – Switzerland: Free Trade Agreement

Highly evolved participation in EU internal market, despite not

(1973)

being Member State.
In addition to the 1972 FTA, Switzerland is a member of the
European Free Trade Association (EFTA) and there are
bilateral trade agreements in the following fields: free
movement of persons, trade in agricultural products, public
procurement, conformity assessments, air transport, transport
by road and rail.

EU – Iceland, Liechtenstein, Norway:

De facto participation in internal EU market without being

European Economic Area (EEA) (1994)

Member State.

EU – Mexico Economic Partnership, Political

Establishment of free trade area for goods and services.

Coordination and Cooperation agreement

Gradual dismantling of trade barriers in a broad range of fields.

(2000)
EU – South Africa Trade, Development and

Establishment of free trade area for goods and services.

Cooperation Agreement (TDCA) (Provisionally Gradual opening-up of markets over 12 years.
2000)

South Africa is also member to the EU-ACP Partnership
Agreement (subject to qualifications) and there is a separate
agreement of wine and spirits.

EU – Chile Association Agreement (2003)

Establishment of free trade area for goods and services.
Progressive dismantling of trade barriers in a broad range of
fields.

EU –Turkey Customs Union (1995)

Customs union, final phase: only industrial products, not
agriculture, services, procurement.
Turkey is candidate country since 1999; accession negotiations
started in 2005. In addition, Turkey is part of the EuroMediterranean Partnership.

22

EU – Andorra Customs Union (1991)

Only industrial products, not agriculture

EU – San Marino Customs Union (2002)

Including agriculture

The impact of Free Trade Agreements in the OECD

FTAs, agreements with FTA provisions
(Entry into force), agreements under
negotiations or awaiting implementation

Details

Stabilisation and Association Agreements

Special relationship with a view to future accession (potential +

(Western Balkan): Former Yugoslav Republic candidate countries).
of Macedonia (2004), Croatia (2005), Albania

Preferential trade access in SAA’s via Interim Agreements on

(2006), Bosnia-Herzegovina (interim),

Trade and Trade-related matters and Autonomous Trade

Montenegro (negotiation), Serbia (2007),

Measures (2000).

Kosovo (negotiation).

The Former Yugoslav Republic of Macedonia and Croatia are
now EU candidate country.

Central European Free Trade Agreement

Since 2007, enhanced trade liberalisation under the CEFTA

(CEFTA) (2007)

(including Moldova)

Association Agreements (Euro-Med

Under European Neighbourhood Policy (ENP).

countries)

Euro-Mediterranean Partnership since 2007 fully part of ENP.

Algeria (2005), Egypt (2004), Israel (2000),

Preferential relationship between the EU and its neighbours.

Jordan (2002), Lebanon (2006), Libya

One of the objectives: establish an FTA with EuroMed. Now

(negotation), Morocco (2000), Palestinian

already progressive tariff dismantling and regulatory

Authority (1997), Syria (1977), Tunisia (1998).

approximation. Duty-free access to EU market for
manufacturing goods and ongoing liberalisation of agriculture,
services and investment.

Partnership and Cooperation Agreements

Under European Neighbourhood Policy.

(Eastern European/Central Asian countries) Preferential relationship between the EU and its neighbours.
Armenia (1999), Azerbaijan (1999), Belarus

Includes most-favoured-nation treatment (tariffs and quotas)

(1995), Georgia (1999), Kazakhstan (1999),

and differentiated progressive trade facilitation (regulatory

Kyrgyz Republic (1999), Moldova (1998),

approximation). Possibility of future FTAs.

Russia (1997), Tajikistan (2004),
Turkmenistan (1998), Ukraine (1998) and
Uzbekistan (1999).
EU – ACP Partnership Agreement (Cotonou

78 countries. Successor to Lomé Conventions. Now also

Agreement) (2000)

Economic Partnership Agreements (EPA’s) with reciprocal

General System of Preferences (GSP) /

The GSP allows for non-reciprocal preferences in favour of

Everything But Arms (EBA) Initiative

developing countries (as exemption from the WTO MFN-rule).

trade preferences.

The EU has a general GSP in place, granting developing
countries duty-free access or tariff reductions.
Under the EBA, LDC’s have (non-reciprocal) duty- and quotafree market access to EU.
Framework Agreement for Commercial and

For over 30 years the Agreement has provided the foundation

Economic Cooperation between the EU and

for the management and development of the EU-Canada

Canada (1976)

relationship in an increasing number of fields, including trade.

Comprehensive Economic and Trade

Under negotiation since 2009

Agreement (CETA)
Trans-Regional EU-ASEAN Trade Initiative

FTA under negotiation since 2007. The Association of South

(TREATI)

East Asian Nations (ASEAN) includes 10 South East Asian
countries (Brunei Darussalam, Cambodia, Indonesia, Laos,
Malaysia, Burma/Myanmar, Philippines, Singapore, Thailand

The impact of Free Trade Agreements in the OECD

23

FTAs, agreements with FTA provisions
(Entry into force), agreements under
negotiations or awaiting implementation

Details

EU-MERCOSUR Association Agreement

FTA under negotiation since 2000

EU- Central America Framework Co-

Association Agreement, including an FTA, under negotiation

operation Agreement (1993)

since 2007.

EU- Andean Community Framework

Association Agreement, including an FTA, under negotiation

and Vietnam).

Cooperation Agreement (1993)
EC-Gulf Cooperation Council (GCC) Co-

FTA under negotiation since 1990, resumed in 2002

operation Agreement (1989)
EU - South Korea Free Trade Agreement

FTA under negotiation since 2007; Framework on Trade and
Co-operation now governing bilateral relations.

EU – China Partnership and Cooperation

Partnership and Cooperation Agreement under negotiation

Agreement

since 2007; will entail a comprehensive agreement and update

EU-India FTA

FTA under negotiation since 2007

the 1985 Agreement

3.3 Netherlands: economic performance
Table 3.3

the Netherlands: Main Economic indictors - 2007
Indicator

The

EU27

Netherlands
Income and Production
GDP (Billion Euros, current prices and PPPs)

469

10,851

28,656

21,877

Real GDP growth (Annual growth in %)

3.5

2.9

Labour productivity (in national currency at constant prices)

39.8

34.9 1)

GDP per capita (Euros, current prices and PPPs)

Trade in goods
Imports (Billions of Euros)

307.8

3,833.9

Exports (Billions of Euros)

348.3

3,747.8

Total trade (Billions of Euros)

656.1

7,581.7

Balance of trade in goods (Billions of Euros)

40.5

-86.1

Imports of services (Billions of Euros)

84.2

1,470.4

Exports of services (Billions of Euros)

96.4

1,666.7

Total trade in services (Billions of Euros)

180.6

3,137.1

Balance of trade in services (Billions of Euros)

12.2

196.3

70.6%

40.0 %

Inflows FDI (Billions of Euros)

72.7

788.5

Outflows FDI (Billions of Euros)

22.8

972.0

Balance FDI (Billions of Euros)

-49.9

183.5

Trade in services

Trade
Trade in goods and services (% of GDP)
Investment

24

The impact of Free Trade Agreements in the OECD

Indicator

The

EU27

Netherlands
Inward stocks 2006 (Billions of Euros)

525.1

6,755.9

Outward stocks 2006 (Billions of Euros)

366.9

6,091.6

Gross fixed capital formation (% of GDP)

20.0 %

21.3%

Inflation
CPI (Year 2000 = 100)

116.3

118.4

GDP deflation (Annual growth rate)

1.5 %

2.8 %

Employment rate (Share of persons of 15 to 64 years in employment)

74.1 %

65.4 %

Unemployment rate (a percentage of civilian labour force)

3.2 %

7.1 %

Employment

Source: OECD Factbook 2009: Economic, Environmental and Social Statistics.
Note: The currency that was used in OECD Factbook was the US dollar. In this Table all the data is recalculated to Euros, with
a 2007 average of 0.73, see footnote 1.
1) See 1) of Error! Reference source not found..

3.4 Selection of 20 sectors for the impact analysis
In Table 3.4 and Table 3.5 the top 20 imports and the top 20 exports is given for the
Netherlands. The classification of those sectors is based on GTAP. More information
about GTAP and the sector description can be found on www.gtap.agecon.purdue.edu.
Table 3.4

Top Netherlands manufacturing imports by GTAP sector, valued in millions of Euros
share of
manufacuturing
exports
rank in 2008

rank in 2004

1

2

GTAP sector

(2008)
19.24

EUR (MLN)

OME - Machinery and equipment n.e.c

36,501.9

2

1

19.23

CRP - Chemical, rubber, plastic pro

36,479.7

3

3

10.01

ELE - Electronic equipment

19,002.0

4

4

8.34

MVH - Motor vehicules and parts

15,827.4

5

6

7.43

P_C - Petroleum, coal products

14,093.4

6

5

4.39

I_S - Ferrous metals

8,326.2

7

8

3.39

OIL - Oil

6,435.8

8

9

2.98

OFD - Food products n.e.c.

5,653.8

9

7

2.70

PPP - Paper products, publishing

5,121.9

10

11

2.65

FMP - Metal products

5,022.1

11

13

2.31

NFM - Metals n.e.c.

4,389.0

12

14

1.59

LUM - Wood products

3,017.3

13

10

1.54

OTN - Transport equipment n.e.c.

2,924.5

14

12

1.29

TEX - Textiles

2,449.0

15

16

1.26

B_T - Beverages and tobacco product

2,383.6

16

17

1.18

MIL - Dairy products

2,233.8

The impact of Free Trade Agreements in the OECD

25

17

19

1.12

NMM - Mineral products n.e.c.

2,118.5

18

20

1.04

WAP - Wearing apparel

1,979.6

19

18

1.01

V_F - Vegetables, fruit, nuts

1,907.7

20

21

0.98

OMF - Manufactures n.e.c.

1,865.4

6.33

Other imports

12,017.5

Total

189,750.2

100.00

Table 3.5

Top Netherlands manufacturing exports by GTAP sector, valued in millions of Euros
share of
manufacuturing
exports
rank in 2008

rank in 2004

GTAP sector

1

1

19.90

33 CRP - Chemical, rubber, plastic products

50,991.7

2

3

16.64

41 OME - Machinery and equipment n.e.c

42,636.5

3

4

12.03

32 P_C - Petroleum, coal products

30,824.6

4

2

11.85

40 ELE - Electronic equipment

30,380.7

5

5

4.51

25 OFD - Food products n.e.c.

11,570.5

6

8

3.91

35 I_S - Ferrous metals

10,010,1

7

6

3.73

38 MVH - Motor vehicules and parts

9,554.4

8

9

2.27

08 OCR - Crops n.e.c.

5,805.1

9

12

2.25

04 V_F - Vegetables, fruit, nuts

5,764.5

(2008)

10

14

2.16

37 FMP - Metal products

5,538.9

11

10

2.14

26 B_T - Beverages and tobacco product

5,495.0

12

12

1.90

36 NFM - Metals n.e.c.

4,867.4

13

20

1.86

21 VOL - Vegetable oils and fats

4,772.1

14

14

1.84

31 PPP - Paper products, publishing

4,721.8

15

13

1.43

27 TEX - Textiles

3,663.7

16

16

1.39

22 MIL - Dairy products

3,571.7

17

21

1.36

42 OMF - Manufactures n.e.c.

3,496.9

18

17

1.33

20 OMT - Meat products n.e.c.

3,417.4

19

18

1.28

39 OTN - Transport equipment n.e.c.

3,292.7

20

19

1.06

28 WAP - Wearing apparel

2,719.1

5.14

Other exports

13,177.2

Total

256,272.1

100.00

26

EUR (MLN)

The impact of Free Trade Agreements in the OECD

4 Context: EU-US Economic relations

4.1 US main economic indicators
Table 4.1

US: Main Economic indictors - 2007
Indicator

US

EU27

GDP (Billion Euros, current prices and PPPs)

10,039

10,851

GDP per capita (Euros, current prices and PPPs)

33,232

21,877

Income and Production

Real GDP growth (Annual growth in %)

2.0

2.9

Labour productivity (in national currency at constant prices)

43.7

34.91)

Trade in goods
Imports (Billions of Euros)

1,473.6

3,833.9

Exports (Billions of Euros)

849.2

3,747.8

Total trade (Billions of Euros)

2,322.8

7,581.7

Balance of trade in goods (Billions of Euros)

-624.4

-86.1

Imports of services (Billions of Euros)

378.1

1,470.4

Exports of services (Billions of Euros)

497.2

1,666.7

Total trade in services (Billions of Euros)

875.3

3,137.1

Balance of trade in services (Billions of Euros)

119.1

196.3

14.7 %

40.0 %

Inflows FDI (Billions of Euros)

173.5

788.5

Outflows FDI (Billions of Euros)

243.5

972.0

Balance FDI (Billions of Euros)

69.9

183.5

Inward stocks 2006 (Billions of Euros)

2,144.9

6,755.9

Outward stocks 2006 (Billions of Euros)

1,571.9

6,091.6

Gross fixed capital formation (% of GDP)

18.4 %

21.3%

Trade in services

Trade
Trade in goods and services (% of GDP)
Investment

Inflation
CPI (Year 2000 = 100)

120.4

118.4

GDP deflation (Annual growth rate)

2.7 %

2.8 %

Employment rate (share of persons of 15 to 64 years in employment)

71.8 %

65.4 %

Unemployment rate (a percentage of civilian labour force)

4.6 %

7.1%

Employment

Source: OECD Factbook 2009: Economic, Environmental and Social Statistics.
Note: The currency that was used in OECD Factbook was the US dollar. In this Table all the data is recalculated to Euros, with
a 2007 average of 0.73, see footnote 1.
1) See 1) of Error! Reference source not found..

The impact of Free Trade Agreements in the OECD

27

4.2 EU-US trade relations
4.2.1
Table and Figure 4.1

Trade in Goods
EU trade with the US – billions of Euros

300
2005

2006

2007

Imports

163.5

175.2

181.1

Exports

252.7

269

261.5

Balance

89.2

93.8

80.4

250
200
150
100
50
0
2005

Source: Eurostat, DG Trade, 2008

Table 4.2

2006
Imports

Exports

2007
Balance

EU trade with the US, by product groups – millions of Euros (2007)
Agricultural

Textiles &

Other

products

Energy

Machinery

equipment

Transport
Chemicals

clothing

products

Imports

7,499

4,130

35,910

23,582

34,054

1,227

74,703

Exports

12,600

18,307

49,677

41,380

54,424

4,193

80,881

Balance

5,101

14,177

13,767

17,799

20,370

2,966

6,179

Source: Eurostat, DG Trade, 2008

Figure 4.1

EU trade with the US, by product groups – millions of Euros (2007)

90.000
80.000
70.000
60.000
50.000
40.000
30.000
20.000
10.000
0
Agricultural
products

Energy

Machinery

Imports
Source: Eurostat, DG Trade, 2008

28

The impact of Free Trade Agreements in the OECD

Transport
equipment
Exports

Chemicals Textiles and
clothing

Balance

Other
products

4.2.2
Table 4.3

Trade in Services
EU27 trade in services with US – Billions of Euros

Services Debit
Services Credit

2004

2005

2006

Imports

107.2

116.4

119.7

Exports

113.4

120.2

131.9

Balance

6.1

3.8

12.2

Government services Debit

Imports

2.1

1.9

2.3

Government services Credit

Exports

4.6

2.9

2.8

Source: Eurostat, DG Trade, 2008

Figure 4.2

US share of EU 25 trade in services

35%

47%

13%
5%
USA

Switzerland

Japan

Other

Source: Eurostat, DG Trade, 2008

4.3 EU-US investment relations
4.3.1
Table and Figure 4.2

FDI flows
EU 27 FDI flows with the US – billions of Euros
80000

60000

2004

2005

2006

40000

Inflows

11.5

67.3

75.6

20000

Outflows

15.5

31.3

72.0

Balance

4.0

-36.0

-3.6

0
-20000
-40000
2004
Inflow s

2005
Outflow s

2006
Balance

The impact of Free Trade Agreements in the OECD

29

Source: Eurostat, DG Trade, 2008

4.3.2
Table 4.4

FDI stocks
EU27 FDI stocks with US – billions of Euros
2004

2005

2006

Inward Stocks

842.2

874.5

953.7

Outward Stocks

815.8

850.4

934.3

Source: Eurostat, DG Trade, 2008

4.4 EU-US Bilateral Agreements and Co-operation
At the EU-US Summit on 30 April 2007, the EU and the US signed the “Framework for
Advancing Transatlantic Economic Integration between the USA and the EU”. The
Transatlantic Economic Council (TEC) was part of this framework and is established to
closer integrate the EU and US economies. The EU and the US also have a range of
further dialogues - the Transatlantic Legislators' Dialogue, the Transatlantic Consumer
Dialogue and the Transatlantic Business Dialogue - designed to further this agenda. The
reports of TEC meetings are available to the public5.
Other US trade agreements
The United States has FTAs with different countries; see Table 4.5 for these details about
other US FTAs.
Table 4.5

Other US trade agreements6
FTAs, agreements with FTA provisions (Entry into
force), agreements under negotiations or awaiting
implementation

Details

The United States-Australia FTA (January 1, 2005)

Under the FTA, more than 99 percent of U.S. exports of
manufactured goods are now duty-free. The FTA will also
eliminate tariffs within 10 years of entry into force on
textiles.

The Trans-Pacific Strategic Economic Partnership

A high-standard FTA between Singapore, Chile, New

agreement (under negotiation)

Zealand, and Brunei Darussalam. Australia, Peru, and
Vietnam indicated their interest in participating as well.

The United States-Bahrain FTA (August 2006)
The Dominican Republic-Central America-United

The CAFTA-DR is the first free trade agreement between

States Free Trade Agreement (CAFTA-DR) with Costa

the United States and a group of smaller developing

Rica, El Salvador, Guatemala, Honduras, Nicaragua and economies.
the Dominican Republic. (August 5, 2004).
5
6

30

http://ec.europa.eu/trade/issues/bilateral/countries/usa/index_en.htm
Source: http://www.ustr.gov/trade-agreements/free-trade-agreements

The impact of Free Trade Agreements in the OECD

FTAs, agreements with FTA provisions (Entry into
force), agreements under negotiations or awaiting
implementation

Details

The United States-Chile FTA (January 1, 2004)

The US and Chile eliminated tariffs on 87 percent of
bilateral trade immediately and will establish duty free
trade in all products within a maximum of 12 years.

The United States-Israel FTA (1985)

Most tariffs between the United States and Israel have
been eliminated as agreed, although tariff and nontariff
barriers continue to affect a certain portion of U.S.
agricultural exports.

The United States-Jordan FTA (December 17, 2001)

Phased tariff reductions culminating in the complete

The United States-Morocco FTA (January 1, 2006)

Eliminating duties on more than 95 percent of all goods

elimination of duties on nearly all products by 2010.

and services.
The North American Free Trade Agreement between the All remaining duties and quantitative restrictions were
United States, Canada, and Mexico (NAFTA) (January

eliminated, as scheduled, on January 1, 2008.

1, 1994)

NAFTA created the world's largest free trade area, which
now links 444 million people producing $17 trillion worth of
goods and services.

The United States- Oman FTA (January 1, 2009)

Oman provided immediate duty-free access on virtually all
industrial and consumer products in its tariff schedule, and
will phase out tariffs on the remaining products and
agricultural products within 10 years.

The United States-Peru Trade Promotion Agreement

Peru's Congress ratified the Agreement in June 2006 and

(PTPA) (April 12, 2006)

a protocol of amendment in June 2007.
On December 14, 2007, President Bush signed into law
the PTPA Implementation Act which approved the PTPA.
The PTPA entered into force on February 1, 2009. The
PTPA is a comprehensive free trade agreement.

The United States -Singapore FTA (January 1, 2004)

Exports from the United States through 2008 increased 73
percent. The United States and Singapore meet annually
to review the implementation of the FTA and to seek to
resolve outstanding trade issues.

The United States has signed free trade agreements with Colombia, Korea, and Panama,
but Congress must enact legislation to approve and implement each individual agreement
in order for them to go into effect.

The impact of Free Trade Agreements in the OECD

31

5 Context: EU-Japan Economic relations

5.1 Japan main economic indicators
Table 5.1

Japan: Main Economic indictors - 2007
Indicator

Japan

EU27

GDP (Billion Euros, current prices and PPPs)

3,138

10,851

GDP per capita (Euros, current prices and PPPs)

24,566

21,877

Income and Production

Real GDP growth (Annual growth in %)
Labour productivity (in national currency at constant prices)

2.1

2.9

4875.2

34.9 1)

Trade in goods
Imports (Billions of Euros)

454.6

3,833.9

Exports (Billions of Euros)

521.8

3,747.8

Total trade (Billions of Euros)

976.4

7,581.7

Balance of trade in goods (Billions of Euros)

67.3

-86.1

Imports of services (Billions of Euros)

149.3

1,470.4

Exports of services (Billions of Euros)

126.2

1,666.7

Total trade in services (Billions of Euros)

275.5

3,137.1

Balance of trade in services (Billions of Euros)

-23.1

196.3

16.8 %

40.0 %

Inflows FDI (Billions of Euros)

149.3

788.5

Outflows FDI (Billions of Euros)

126.2

972.0

Balance FDI (Billions of Euros)

275.5

183.5

Inward stocks 2006 (Billions of Euros)

328.4

6,755.9

Outward stocks 2006 (Billions of Euros)

78.6

6,091.6

Gross fixed capital formation (% of GDP)

23.2 %

21.3%

Trade in services

Trade
Trade in goods and services (% of GDP)
Investment

Inflation
CPI (Year 2000 = 100)

98.1

118.4

GDP deflation (Annual growth rate)

-0.7%

2.8 %

Employment rate (share of persons of 15 to 64 years in employment)

70.7%

65.4 %

Unemployment rate (a percentage of civilian labour force)

3.9%

7.1 %

Employment

Source: OECD Factbook 2009: Economic, Environmental and Social Statistics.
Note: The currency that was used in OECD Factbook was the US dollar. In this Table all the data is recalculated to Euros, with
a 2007 average of 0.73, see footnote 1.
1) See 1) of Error! Reference source not found..

The impact of Free Trade Agreements in the OECD

33

5.2 EU-Japan trade relations
5.2.1
Table and Figure 5.1

Trade in Goods
EU trade in goods with Japan – billions of Euros
Year

2005

2006

2007

Imports

74.1

77.3

78.1

Exports

43.7

44.7

43.8

Balance

-30.4

-32.6

-34.3

80.000
60.000
40.000
20.000
0
-20.000
-40.000
2005

Source: Eurostat, DG Trade, 2008

Table 5.2

Imports

Exports

2007
Balance

EU trade in goods with Japan, by product groups - millions Euros (2007)
Agricultural

Energy

Machinery

products

Transport

Chemicals

equipment

Textiles &

Other

clothing

products

Imports

160

526

20,034

19,670

6,119

484

31,112

Exports

4,610

369

6,372

6,252

8,375

1,705

16,075

Balance

4,451

157

13,662

13,417

2,256

1,221

15,037

Source: Eurostat, DG Trade, 2008

34

2006

The impact of Free Trade Agreements in the OECD

Figure 5.1

EU trade in goods with Japan, by product groups - millions Euros (2007)

35000
30000

25000
20000

15000
10000

5000
0
Agricultural
products

Energy

Machinery

Transport
equipment

Imports

Exports

Chemicals Textiles and
clothing

Other
products

Balance

Source: Eurostat, DG Trade, 2008

5.2.2
Table 5.3

Trade in Services
EU27 trade in services with Japan – Billions of Euros
2004

2005

2006

Services Debit

Imports

11.0

12.2

12.9

Services Credit

Exports

18.3

19.5

18.9

Balance

7.3

7.3

6.0

Government services Debit

Imports

0.99

0.82

0.73

Government services Credit

Exports

0.83

0.59

0.35

Source: Eurostat, DG Trade, 2008

The impact of Free Trade Agreements in the OECD

35

Figure 5.2

Japan Share of EU 25 trade in services

35%

47%

13%
5%
USA

Switzerland

Japan

Other

Source: Eurostat, DG Trade, 2008

5.3 EU-Japan investment relations
5.3.1
Table 5.4

FDI flows
80000

EU FDI flows with Japan – Billion Euros
2004

2005

2006

60000
40000

Inflows

8.2

-4.6

13.6

Outflows

5.8

11.9

0.5

Balance

-2.4

16.5

-13.1

20000
0
-20000
-40000
2004

Source: Eurostat, DG Trade, 2008

Inflows

5.3.2
Table 5.5

Outflows

2006
Balance

FDI stocks
EU FDI stock with Japan – Billion of Euros
2004

2005

2006

Inward Stocks

89.2

82.7

99.3

Outward Stocks

79.5

90.2

75.5

Source: Eurostat, DG Trade, 2008

36

2005

The impact of Free Trade Agreements in the OECD

5.4 EU-Japan Bilateral Agreements and Co-operation7
The EU and Japan has two bilateral trade related agreements and several formal cooperation agreements; Table 5.6 presents an overview of the existing agreements.
Table 5.6

Bilateral agreements and co-operation between the EU and Japan
Bilateral agreements and Co-operation

Details

There are two formal trade related agreements
The EU-Japan Mutual Recognition Agreement (1

Permits acceptance of conformity assessment

January 2002)

conducted in one Party according to the regulations of
the other in four product areas (telecommunications
terminal equipment and radio equipment, electrical
products, Good Laboratory Practices for chemicals
and Good Manufacturing Practices for
pharmaceutical), an important step in facilitating
market access.

An Agreement on Co-operation on Anti-

This agreement should facilitate both trade and

competitive Activities (16 June 2003)

investment by securing a level-playing field between
in- and outsiders.

The EU and Japan cooperate in several ways:
Joint Declaration on Relations between the
European Community and its Member States and
Japan (18 July, 1991)
A ten-year Action Plan (December 2001)

Action Plan is to reinforce EU-Japan partnership. The
Action Plan has four objectives, one of those is “the
strengthening of the Economic and Trade
Partnership”, not only in bilateral relation, also on
international markets, including the WTO

Cooperation Framework (22 June 2004)

On 22 June 2004 Japan and the EU reconfirmed the
importance of the strategic partnership. They
recognised importance of trade and bilateral
investment; therefore they endorsed a Cooperation
Framework. In addition to this also the value of
Intellectual Property Rights is recognized.

Regulatory Reform Dialogue

Both Japan and the EU want to reduce the number of
unnecessary and obstructive regulations which
obstruct trade and FDI.

Co-operation in the context of the WTO (since 1998)

The EU and Japan has bilateral consultations to
achieve common position on issues relating to WTO
negotiations

7

http://ec.europa.eu/trade/issues/bilateral/countries/japan/index_en.htm

The impact of Free Trade Agreements in the OECD

37

Other Japan trade agreements8
Until recently, Japan focused its bilateral negotiating agenda on a few countries around
the Pacific. In Table 5.7 an overview is given of Japans bilateral trade agreement and
which ones are coming up.
Table 5.7

Overview of bilateral trade agreements of Japan
Bilateral trade agreements
Singapore (2002), Malaysia (2004), Mexico (2004), Philippines (2006), Indonesia (2007), Chile (2007),
Thailand (2007), ASEAN as a whole (2008) and Vietnam (2008).
In mid-2006, Japan started to negotiate a FTA with Brunei.
Since 2006 Japan proposed an overarching East Asian FTA encompassing ASEAN, India, China, Korea,
Australia and New Zealand. ASEAN, among others, was not that enthusiastic.
In 2007, negotiations with India and Australia began. China, Korea, Cambodia and Laos are also on the
agenda.
FTA with Kuwait and other oil and gas-rich Gulf Cooperation Council (GCC), negotiations since 2006.
Switzerland, since 2007 under negotiations.

8

38

Source: www.bilateral.org

The impact of Free Trade Agreements in the OECD

6 Context: EU-Australia/New Zealand
Economic relations

6.1 Australia and New Zealand main economic indicators
Table 6.1

Australia and New Zealand: Main Economic indictors - 2007
Indicator

AUS

NZ

AUS +

EU27

NZ
Income and Production
GDP (Billion Euros, current prices and PPPs)
GDP per capita (Euros, current prices and PPPs)

581

1)

27,4431)

1)

664

10,851

20,0401)

26,184

21,877

84

4.4%

1)

3.0 %

1)

N.A.

2.9

47.9

2)

38.42)

N.A.

34.93)

Imports (Billions of Euros)

115.3

22.6

137.9

3,833.9

Exports (Billions of Euros)

103.0

19.7

122.7

3,747.8

Total trade (Billions of Euros)

218.3

42.2

260.5

7,581.7

Balance of trade in goods (Billions of Euros)

-12.3

-2.9

-15.2

-86.1

39.1

9.1

48.2

1,470.4

Real GDP growth (Annual growth in %)
Labour productivity
Trade in goods

Trade in services
Imports of services (Billions of Euros)
Exports of services (Billions of Euros)

40.3

9.3

49.6

1,666.7

Total trade in services (Billions of Euros)

79.4

18.4

97.8

3,137.1

Balance of trade in services (Billions of Euros)

1.2

0.2

1.4

196.3

20.7%

29.0%

NA

40.0 %

Inflows FDI (Billions of Euros)

17.2

2.1

19.3

788.5

Outflows FDI (Billions of Euros)

18.8

2.1

20.8

972.0

Trade
Trade in goods and services (% of GDP)
Investment

Balance FDI (Billions of Euros)
Inward stocks 2006 (Billions of Euros)

1.5

0.0

1.5

183.5

166.2

9.0

175.2

6,755.9

Outward stocks 2006 (Billions of Euros)

182.5

46.3

228.8

6,091.6

Gross fixed capital formation (% of GDP)

27.7%1)

22.9%1)

NA

21.3%

CPI (Year 2000 = 100)

123

119.6

NA

118.4

GDP deflation (Annual growth rate)

4.41)

4.31)

NA

2.8 %

72.9%

75.4%

NA

65.4 %

4.4%

3.6%

NA

7.1 %

Inflation

Employment
Employment rate (Share of persons of 15 to 64 years in
employment)
Unemployment rate (As a percentage of civilian labour force)

The impact of Free Trade Agreements in the OECD

39

Source: OECD Factbook 2009: Economic, Environmental and Social Statistics.
Note: The currency that was used in OECD Factbook was the US dollar. In this Table all the data is recalculated to Euros, with
a 2007 average of 0.73, see footnote 1.
1) Data refer to fiscal year
2) Labour productivity is expressed in national currencies at constant prices.
3) See 1) of Error! Reference source not found..

6.2 EU-Australia/New Zealand trade relations
6.2.1
Table 6.2

Trade in Goods
EU27 Trade in goods with Australia/New Zealand – Billion of Euros
2005

2006

2007

12.6

14.2

14.8

Exports

23.0

24.1

25.6

Balance

11.3

9.9

10.8

Imports

Source: Eurostat, DG Trade, 2008

Figure 6.1

EU27 Trade in goods with Australia and New Zealand – Billions of Euros

30
25
20
15
10
5
0
2005

2006
Imports

Exports

2007
Balance

Source: Eurostat, DG Trade, 2008

Table 6.3

EU27 trade in goods, by product group – million of Euros
Agricultural

Transport
Machinery

40

Other
products

Imports

3,856

2,642

730

264

904

39

6,369

Exports

1,612

31

6,095

4,552

4,497

457

8,370

Balance

-2,245

-2,611

5,364

4,288

3,592

418

2,001

The impact of Free Trade Agreements in the OECD

Chemicals

clothing

Energy

Source: Eurostat, DG Trade, 2008

equipment

Textiles &

products

10000

8000

6000

4000

2000

0

-2000

-4000
Agricultural
products

Energy

Machinery

Imports

Transport
equipment
Exports

Chemicals

Textiles and
clothing

Other products

Balance

Source: Eurostat, DG Trade, 2008

6.2.2
Table 6.4

Trade in Services
EU 27 Trade in services with Australia and New Zealand –Billions of Euros
2004

2005

2006

Services Debit

Imports

6.2

7.0

7.4

Services Credit

Exports

8.8

10.2

10.8

Balance

2.6

3.2

3.4

Government services Debit

Imports

0.50

0.64

0.66

Government services Credit

Exports

0.61

0.51

0.43

Source: Eurostat, DG Trade, 2008

The impact of Free Trade Agreements in the OECD

41

Figure 6.2

Australia and New Zealand share of EU25 trade in services (2006)

3%

34%
46%

5%
AU + NZ

USA

Switzerland

12%
Japan

Other

Source: Eurostat, DG Trade, 2008

6.3 EU- Australia/New Zealand investment relations
6.3.1
Table 6.5

FDI flows
FDI flows with Australia and New Zealand –Billions of Euros

Inflows

2004

2005

2006

3.6

5.3

4.0

Outflows

1.6

-1.4

7.6

Balance

-2.0

-6.7

3.6

Source: Eurostat, DG Trade, 2008

Figure 6.3

FDI flows with Australia and New Zealand – millions Euros

8
6
4
2
0
-2
-4
-6
-8
2004

2005
Inflows

Outflows

2006
Balance
Source: Eurostat, DG Trade, 2008

42

The impact of Free Trade Agreements in the OECD

6.3.2
Table 6.6

FDI stocks
FDI Stocks with Australia and New Zealand –Billions of Euros
2004

2005

2006

Inward Stocks

37.8

23.8

19.1

Outward Stocks

66.8

58.6

55.8

Source: Eurostat, DG Trade, 2008

6.4 EU- Australia/New Zealand Bilateral Agreements9 and Co-operation
The EU and Australia are parties to a bilateral agreement that aims to facilitate trade in
industrial products between the EU and Australia by reducing technical barriers,
including assessment procedures. This agreement covers mutual recognition of
conformity assessment procedures, with the objective of reducing the costs of testing and
certification of products exported to and imported from Australia. It applies to medicinal
devices, telecom terminal equipment, electrical safety, pharmaceutical GMP, machinery
and pressure equipment, and motor vehicles.
Since 1999 the EU and New Zealand have the almost the same bilateral agreement as the
EU and Australia. It covers around one third of all EU merchandise products exported to
New Zealand including medicine products and devices, telecommunication equipment,
low voltage equipment, machinery and pressure equipment. In 2003 a similar agreement
entered into force; this agreement aimed at facilitating trade in live animals and animal
products while safeguarding public and animal health.
Other trade agreements10
Australia has been actively engaged in bilateral FTA negotiations, while maintaining that
its top priority is multilateral trade negotiations at the WTO. In Table 6.7 the bilateral
trade and investment deals which Australia has concluded are given.
Table 6.7

Australia’s bilateral trade and investment agreements
Bilateral trade and investment agreements, agreements under negotiations or awaiting implementation
New Zealand (1983), Singapore (2003), Thailand

Concluded FTAs

(2004), the United States (2004) and Chile (2008).
Pacific Agreement on Closer Economic Relations

Along with New Zealand and Pacific Island Nations

(PACER)
FTAs with China, the GCC, Japan, Malaysia, the

All under negotiation.

United Arab Emirates and, together with New
Zealand, ASEAN
The Pacific-4, or P4 (Negotiations started in March

9

10

The "Trans-Pacific Strategic Economic Partnership

http://ec.europa.eu/trade/issues/bilateral/countries/australia/index_en.htm and
http://ec.europa.eu/trade/issues/bilateral/countries/newzealand/index_en.htm
Source: www.bilateral.org

The impact of Free Trade Agreements in the OECD

43

2009)

Agreement" (P4), is a FTA between the four Pacific
governments of Brunei Darussalam, Chile, New
Zealand and Singapore. The negotiations started in
March 2009, to join this FTA along with the US, Peru
and possibly Vietnam.

New Zealand is a party to a number of completed free trade and investment agreements.
See Table 6.8.
Table 6.8

New Zealand’s bilateral trade and investment agreements
Bilateral trade and investment agreements, agreements under negotiations or awaiting implementation
The Australia-New Zealand Closer Economic Relations Agreement (1983)
The New Zealand-Singapore Closer Economic Partnership (2001)
The New Zealand-Thailand Closer Economic Partnership (2005)
The Trans-Pacific Strategic Economic

The "Trans-Pacific Strategic Economic Partnership Agreement"

Partnership or P4 (2005)

(P4), is a FTA between the four Pacific governments of Brunei
Darussalam, Chile, New Zealand and Singapore.

The New Zealand-China Free Trade Agreement (2008)
New Zealand is currently negotiating FTAs with Malaysia, ASEAN (together with Australia), Hong Kong
(stalled) and the GCC.
A New Zealand-India agreement (Currently being studies).
New Zealand has also signed a number of IPPAs (bilateral investment treaties) with Chile, Argentina, Hong
Kong, China and others.
The P4 expansion to include the US and

While negotiating a US-New Zealand FTA was resisted, partly

others

because of New Zealand’s anti-nuclear policy; the expansion of
the P4 agreement to include the US would bring important
changes to New Zealand policies. Peru and possibly Vietnam
would also join the FTA.

44

The impact of Free Trade Agreements in the OECD

7 The model

In order to be able to solidly quantify the potential economic effects of FTAs between the
EU-US, EU-Japan and EU-Aus/NZ in terms of trade and investments, we employ a multiregion computable general equilibrium (CGE) model developed by Prof. Joe Francois.
This chapter describes the model, its specifications and limitations.

7.1 Computable General Equilibrium: The Multi-Region Trade Model
7.1.1

CGE model specifications
CGE
The CGE model that has been used for this study is based on the Francois, Van Meijl, and
Van Tongeren model (FMT 2005)11 and is implemented in GEMPACK – a software
package designed for solving large applied general equilibrium models.12 The model
builds on Francois (2000),13 and versions have recently been employed for impact
assessment studies for the EC WTO negotiations, as well as for the prospective FTA
negotiations for the EU-Korea (Copenhagen Economics, 2007)14, EU-MERCOSUR
(2008)15, EU-India (ECORYS, 2009a)16, EU-ASEAN (ECORYS, 2009b)17, EUANDEAN (University of Manchester et al. , 2009)18 and EU-Central America (ECORYS,
2009c)19 as well as a large-scale Asian Development Bank assessment of regional
integration schemes in Asia (Francois and Wignarajan, 2007).20 The model is solved as an
explicit non-linear system of equations, through techniques described by Harrison and
Pearson (1994). The model is a standard multi-region computable general equilibrium
(CGE) model, with important features related to the structure of competition (as described
11
12
13

14

15

16
17
18

19

20

Francois. J.F., H. van Meijl and F. van Tongeren (2005), “Trade Liberalization in the Doha Development Round,” Economic
Policy April: 349-391.
The full model code for Francois, van Meijl and van Tongeren can be downloaded from the internet at
http://wwwi4ide.org/francois/data.htm/.
Francois, J.F., THE NEXT WTO ROUND: North-South stakes in new market access negotiations, CIES Adelaide and the
Tinbergen Institute, CIES: Adelaide, 2001. ISBN: 086396 474 5.
Economic Impact of a Potential Free Trade Agreement (FTA) Between the European Union and South Korea,
Short study by Copenhagen Economics & Prof. J. F. Francois, 2007.
Trade Sustainability Impact Assessment (TSIA) on the Association Agreement under negotiation between the European
Community and Mercosur, study by the University of Manchester with input from Prof. J.F. Francois, 2008.
Trade Sustainability Impact Assessment of the FTA between the EU and the Republic of India, study by ECORYS, 2009.
Trade Sustainability Impact Assessment of the FTA between the EU and ASEAN, study by ECORYS, 2009.
EU-Andean Trade Sustainability Impact Assessment, study by the University of Manchester, CEPR and Development
Solutions, 2009.
Trade Sustainability Impact Assessment of the Association Agreement to be negotiated between the EU and Central
America, Study by ECORYS, 2009.
Francois, J.F. and G. Wignarajan (2007), “Pan-Asian Integration: Economic Implications of Integration Scenarios,” Asian
Development Bank discussion paper.

The impact of Free Trade Agreements in the OECD

45

by Francois and Roland-Holst 1997).21 Imperfect competition features are described in
detail in Francois (1998).22
Data
The data we employ in this analysis is the GTAP version 7.0 dataset with data
benchmarked to 2004, which is the best and most up-to-date source of internally
consistent data on production, consumption and international trade by country and sector.
For more information, see Dimaran and McDougall (2006)23. The GTAP data on
protection incorporates the Macmaps data set, which includes a set of ad valorem
equivalents (AVEs) of border protection across the world. The source information
concerns various instruments, such as specific tariffs, mixed tariffs and quotas, which
cannot be directly compared or summed. In order to be of use in a CGE model, these have
been converted into an AVE per sector, per country and per trading partner. The GTAP
database also includes detailed information on input-output, trade and final demand
structures for the whole world.
We observe that some important changes to the trade policy environment have happened
since 2004 that we wish to include in the basic dataset. Therefore, before conducting any
policy experiments, we first run a pre-experiment, where we include the ATC phase-out
(and new China quotas imposed by the EU and US), China’s full accession to the WTO,
and EU-10 joining the European Union in 2004, and recent FTA agreements (since 2004)
that have been concluded. In addition, we are interested in the impact of underlying
growth in the medium term. We therefore project the basis 2004 database to the year
2020 based on IMF medium-term macroeconomic projections of GDP and trade volumes.
Thus we employ for the analysis a representation of a notional world economy in 2020,
where we have realized many of the trade policy reforms that have taken place since then.
Trade data come from EUROSTAT and COMTRADE. Protection data in the WTO and
WITS tariff databases have been complemented with additional sources like the WTO's
integrated database, including supplemental information from the World Bank's recent
assessment of detailed pre- and post-Uruguay Round tariff schedules, the UNCTAD /
World Bank WITS dataset, and the EU DG Trade’s Market Access Database (MAD).
Conceptual structure of an economy
The general conceptual structure of an economy in the model is as follows. Within each
region, firms produce output, employing land, labour, capital, and natural resources and
combining these with intermediate inputs. Firm output is purchased by consumers,
government, the investment sector, and by other firms. Firm output can also be sold for
export. Land is only employed in the agricultural sectors, while capital and labour (both
skilled and unskilled) are mobile between all production sectors. Capital is fully mobile
within regions. All demand sources combine imports with domestic goods to produce a

21
22
23

46

Francois, J.F. and D.W. Roland-Holst (1997), "Scale economies and imperfect competition, in Francois,J.F. and K.A.
Reinert, eds. (1997), Applied methods for trade policy analysis: a handbook, Cambridge University Press: New York.
Francois, J.F. (1998), "Scale economies and imperfect competition in the GTAP model," GTAP consortium technical paper.
http://www.gtap.agecon.purdue.edu/resources/res_display.asp?RecordID=317
Dimaran, B, and McDougall, R., ed. (2007). The GTAP database -- version 7, Global Trade Analysis Center: Purdue
University.

The impact of Free Trade Agreements in the OECD

composite good. Investment effects are also included, along the lines of Francois,
McDonald, and Nordstrom (1996).24
Taxes
Taxes are included in the theory of the model at several levels. Production taxes are
placed on intermediate or primary inputs, or on output. Some trade taxes are modelled at
the border. Additional internal taxes are placed on domestic or imported intermediate
inputs, and are applied at differential rates that discriminate against imports. Where
relevant, taxes have also been placed on exports, and on primary factor income. Finally,
where relevant (as indicated by social accounting data) taxes are placed on final
consumption, and can be applied differentially to consumption of domestic and imported
goods.
Trade policy instruments
Trade policy instruments are represented as import or export taxes or subsidies. This
includes applied most-favoured nation (MFN) tariffs, antidumping duties, countervailing
duties, price undertakings, export quotas, and other trade restrictions. The major
exception is service-sector trading costs, which are discussed in the next section. The full
set of tariff vectors are based on WTO tariff schedules, augmented with data on trade
preferences. The set of services trade barrier estimates is described below.
International trade costs
International trade is modelled as a process that explicitly involves trading costs, which
include both trade and transportation services. These trading costs reflect the transaction
costs involved in international trade, as well as the physical activity of transportation
itself. Those trading costs related to international movement of goods and related logistic
services are met by composite services purchased from a global trade services sector,
where the composite "international trade services" activity is produced as a CobbDouglas composite of exports of trade and transport service exports. Trade-cost margins
are based on reconciled f.o.b. and c.i.f. trade data, as reported in version 7.0 of the GTAP
dataset.
Frictional trading costs
A second form of trade costs is known in the literature as frictional trading costs. These
are implemented in the service sector. They represent real resource costs associated with
producing a service for sale in an export market instead of the domestic market.
Conceptually, we have implemented a linear transformation technology between
domestic and export services. The basic methodology for estimation of services barriers
involves the estimation of a gravity equation using panel data as detailed in Francois,
Hoekman, and Woerz (2007).25

24

25

Francois, J.F., B. McDonald and H. Nordstrom (1996), "Trade liberalization and the capital stock in the GTAP model,"
GTAP consortium technical paper. http://www.gtap.agecon.purdue.edu/resources/res_display.asp?RecordID=310).
Francois, J.F. B. Hoekman and J. Woerz (2007). “Does gravity apply to non-tradables? Estimating barriers to trade in
services.” Paper presented at the ETSG annual meetings, September 2007.

The impact of Free Trade Agreements in the OECD

47

7.1.2

Model variables and results
The economic impacts of the analysed FTAs are described in two separate sections:
macro-economic (overall) economic effects and sector-specific effects.
Macro-economic effects
The macro-economic effects show the impact of the FTAs on the economies as a whole
and will be measured in terms of changes in national income, changes in exports and
imports, changes in wage levels (separately for high- and low-skilled workers) and
changes in the terms of trade.
Sector-specific effects
At sector-specific level (33 sectors are specified as shown in section 7.2.1) the economic
impact is captured by changes in output (production), exports and imports, prices, and
employment (high- and low-skilled workers).
In Chapters 8 to 10 the results will be presented and analysed looking for primary (and if
relevant and applicable secondary) effects and the way in which the FTA affects the
economies. In addition to the macro-economic effects of the modelled liberalisations, the
results will also indicate to what extent the effects can be attributed to the three
components of the scenario – tariff reductions, services liberalisation and NTB reduction.

7.1.3

Dynamics of the model and short- and long-run effects
The CGE model is comparative static in nature and does not fully capture all the timeelement of effects. However, we have added features to the model to capture the dynamic
nature of the FTA. First of all, investments are included in the model to allow for
adjustment over time towards those sectors where comparative advantages are greatest.
Secondly, we have added a short- and long-run split into the results. The long-run closure
is based on Francois et al (1997) and links capital stocks to long-run (stead-state) changes
in investment in response to changes in incomes and returns to investment. The long-run
closure provides an assessment of the impact of FTA-induced policy changes on the
capital stock, thereby capturing the induced expansion (or contraction) of the economy
over a longer time horizon following FTA implementation. The long-run effects, which
include those of the short-run, also incorporate other additional effects such as those
resulting from capital accumulation. The short-run results show the immediate effects of
the FTAs assuming that capital is fixed in the short-run, essentially showing the results of
an FTA without dynamic capital adjustments.
We will see that this distinction between the short- and long-run is important. In some
sectors:
•
The dynamic effects are more positive (long-run) than in the short-run, while in other
sectors effects can become more negative in the LR;
•
Projected losses are smaller in the LR or sectors show higher growth and gains for
both trading partners following dynamic capital adjustments (i.e. creating win-win
situations);
•
Short-run gains evaporate due to negative dynamic investment effects.

48

The impact of Free Trade Agreements in the OECD

7.1.4

Third country effects
The CGE model allows us to look at third country effects, by analysing trade creation,
trade diversion, as well as price and wage effects. In general, two observations can be
made:
•
Trade diversion is expected more in FTAs that involve countries with relatively
higher levels of initial protection, shifting trade patterns to less efficient producers;
•
FTAs tend to favour those countries involved in the FTA at the expense of countries
not in the FTAs because preferential treatments are granted (bilaterally).
The results for third countries are reported in terms of changes in national income,
exports, imports, prices and wages (for high- and low-skilled workers). Please note that –
because of the scenario specifications – some countries are always categorised as third
countries (e.g. the group Brazil-Russia-India-China) while some countries are either
inside the FTA or third countries (e.g. the US is inside the EU-US FTA, but a third
country with respect to an EU-Japan or EU-Aus/NZ FTA).

7.1.5

CGE modelling assumptions and limitations
CGE modelling is the best tool to evaluate the outcomes of policy changes in a general
equilibrium setting. It yields outcomes with respect to output, employment wage changes
and other macroeconomic variables that are important for policy making. However, some
caution and awareness are needed when interpreting the results because of constraints
related to the quality and quantity of data and those emanating from the model itself.
With respect to the latter, below are some of the key limitations associated with CGE
modelling of which policy makers aught to be aware:
•
The assumption of full employment and a fixed trade balance and budget deficit rules
out economic phenomena such as involuntary unemployment and effective market
failures in the short-run – making this CGE model essentially a long-run model;
•
The comparative-static approach allows for the description of the relative changes in
the economy when all the necessary adjustments have taken place. It does not provide
insights into the specific timing or patterns of adjustment;
•
Trade in services is included explicitly in the model but for cross-border modes only;
•
We assume market clearing in the labour market. In the product market, however, we
assume that market imperfections exist. For example, we model product
differentiation in the manufacturing and services sectors, while we assume
homogeneity of goods in the agricultural sector;
•
Non-tariff barriers (NTBs) are modelled using AVEs, and results show the net effect
of NTBs overall. Specific modelling of the effects of individual NTBs is not pursued
in this study;
•
The informal sector is not taken into account.

The impact of Free Trade Agreements in the OECD

49

7.2 Model inputs for the trade and investment liberalisation scenarios
7.2.1

Sector specification for model analysis
The CGE model employed in this study includes 33 sectors that in total represent the
entire economies under investigation. The 20 first sectors are those of highest importance
for the Netherlands in terms of total trade volumes, based on the GTAP 7.0 database and
COMTRADE data for the presented sectors (see section 3.4). The 33 sectors are listed
below in Table 7.1 whereby the 20 most important trade-sectors for the Netherlands are
presented in bold.

Table 7.1

Sectors modelled in CGE
Sector

Sector (continued)

GTP 04 vegetables and fruits

GTP 38 motor vehicles

GTP 08 crops, n.e.c. (except grains)

GTP 39 other transport equipment

GTP 15, 16, 17 oil, gas, and coal

GTP 40 electrical machinery and equipment

GTP 20 meats, except beef

GTP 41 other machinery and equipment

GTP 21 vegetables oils

GTP 42 manufactures, n.e.c.

GTP 22 dairy products

GTP 43-45 utilities

GTP 25 processed foods, n.e.c.

GTP 46 construction

GTP 26 beverages and tobacco

GTP 47 retail and wholesale trade and warehousing

GTP 27 textiles

GTP 48-50 transport services

GTP 28 clothing

GTP 51 communications

GTP 30 wood products

GTP 52 other financial services

GTP 31 paper, pulp, and publishing

GTP 53 insurance

GTP 32 petro-chemicals

GTP 54 other business services

GTP 33 chemicals, rubber, and plastics

GTP 55 recreational and consumer services
GTP 56-57 other services (public health, education,

GTP 35 iron and steel

residential)

GTP 36 non-ferrous metals

GTP 1-3, 5-7, 9-14, 18-19, 23-24, 29, 34 other goods

GTP 37 fabricated metals

7.2.2

Country specification for model analysis
For this study, Table 7.2 shows the separate countries/blocks that are investigated. The
Netherlands is taken out of the EU-27 in order to look specifically at the effects of the
three FTAs for the Dutch economy. This leaves EU-26 as another block indicating the
economic impact of the FTAs for the EU (minus the Netherlands). Further, the most
important global economies (and OECD members) and trade partners are split out as
United States of America, Japan and Australia/New Zealand (one block). The effects of
the modelled FTAs are also analysed for the four most important emerging economies
(the BRIC countries). Rest of World (ROW) groups all countries not previously specified
together to make sure all countries of the world are included.

50

The impact of Free Trade Agreements in the OECD

Table 7.2

Countries modelled in CGE
Country or block of countries

Abbreviation used in result tables

The Netherlands

NL

European Union 26 (EU27 - the Netherlands)

EU26

United States of America

US

Japan

JP

Australia / New Zealand (as one block)

7.2.3

AUSNZ

China-Brazil-Russia-India (as one block)

BRIC

Rest of the world (as one block)

ROW

Scenario specifications
In order to be able to look at the pure effects of the FTAs, avoiding all kinds of other
developments that also take place in parallel, we first develop a baseline that incorporates
the most likely development of the overall macro-economy including the most likely
policy scenarios. When assessing the impact of the potential three FTAs, we measure and
report the deviations from that baseline scenario, comparing the future without the FTAs
and with the FTAs. This is graphically presented in Figure 7.1.

Figure 7.1

Graphical representations of CGE baseline and FTA scenario developments

economic
effects

Presented effects of
the FTA

Baseline + FTA

Baseline
2008
(= t0)

2020

time

The baseline scenario
The baseline scenario used is based on World Bank, IMF and OECD macro-economic
forward-looking projections, in conjunction with specifications on current (or future)
FTAs, WTO agreements, and other known unilateral, bilateral or multilateral policy
initiatives. More concretely, the baseline scenario is constructed according to the
following specifications and assumptions:
•
In the baseline, existing commitments of each partner to the FTA under existing
WTO agreements and existing FTAs are taken into account, as well as the extent to
which these commitments have been implemented;
•
The baseline scenario assumes that the EU-Korea FTA has been concluded (on the
basis of current negotiating texts). Other negotiations on FTAs that are currently
under negotiation are not taken into account;
•
The baseline scenario excludes (the results of) the Doha Development Round (DDR).

The impact of Free Trade Agreements in the OECD

51

Table 7.3 and Table 7.4 below show the shares of value added and exports used for the
different blocks in the baseline scenario– based on 2008 shares projected forward using
IMF and World Bank data. This table provides information about the relative importance
of each sector in value added terms (for output) and export share (for exports), important
for interpreting the model outcomes later. A small percentage change in a sector with a
high share of value added could be more important than a large percentage change in a
sector with a very low share of value added.
Table 7.3

Value added shares in percentages
NL

52

EU26

US

JP

Aus/NZ

BRIC

ROW

chemicals, rubber, and plastics

1.3

2.8

2.3

2.3

1.3

2.6

2.0

other machinery and equipment

2.3

3.3

3.2

3.4

0.7

5.2

2.3

petro-chemicals

0.2

0.1

0.1

0.1

0.1

0.3

0.3

electrical machinery and equipment

0.1

0.5

0.3

2.0

0.1

3.0

1.8

processed foods, n.e.c.

1.6

1.6

1.0

1.2

1.1

0.8

1.2

iron and steel

0.5

0.4

0.4

0.9

0.4

1.6

0.6

motor vehicles

0.6

1.5

1.0

2.0

0.7

1.2

1.4

crops, n.e.c. (except grains)

2.2

0.6

0.2

0.3

0.2

0.7

0.8

vegetables and fruits

0.6

0.7

0.4

0.6

1.1

5.4

2.5

fabricated metals

0.8

1.5

1.0

1.2

0.8

1.2

0.8

beverages and tobacco

0.5

0.3

0.3

0.7

0.7

0.4

0.6

non-ferrous metals

0.1

0.3

0.2

0.3

0.2

0.7

0.5

vegetables oils

0.1

0.1

0.0

0.0

0.1

0.1

0.2

paper, pulp, and publishing

1.9

1.6

1.5

1.6

1.8

0.9

1.1

textiles

0.2

0.4

0.3

0.2

0.2

1.3

0.9

dairy products

0.6

0.4

0.2

0.1

0.4

0.3

0.3

manufactures, n.e.c.

0.7

0.7

0.3

0.6

0.4

1.3

0.6

meats, except beef

0.2

0.2

0.2

0.1

0.2

0.1

0.2

other transport equipment

0.4

0.4

0.8

0.4

0.2

0.8

0.5

clothing

0.3

0.4

0.0

0.3

0.2

1.0

0.5

oil, gas, and coal

2.1

0.9

1.8

0.0

6.0

5.0

13.6

wood products

0.3

0.6

0.9

0.3

0.5

0.5

0.7

other goods

2.1

3.5

2.2

2.2

8.4

11.7

7.5

utilities

1.9

1.9

1.8

2.0

2.2

2.1

2.1

construction

6.4

5.8

7.2

6.9

6.4

9.2

5.7

retail and wholesale trade and warehousing

11.9

13.3

12.9

15.7

13.2

8.2

11.0

transport services

4.5

4.8

2.9

5.0

4.8

4.1

4.3

communications

2.5

2.3

2.0

2.4

3.0

1.2

1.9

other financial services

2.2

2.8

7.4

3.9

3.7

3.1

3.2

insurance

1.4

1.0

2.0

1.5

2.1

0.9

1.0

other business services

21.9

20.1

9.9

10.1

10.7

5.0

6.2

recreational and consumer services

3.1

3.7

3.4

3.4

2.6

2.0

2.3

other services (public health, education, residential)

24.8

21.5

32.0

28.6

25.8

18.5

21.6

The impact of Free Trade Agreements in the OECD

Table 7.4

Export shares in percentages
NL

EU26

US

JP

Aus/NZ

BRIC

ROW

chemicals, rubber, and plastics

11.5

14.3

12.4

11.1

2.9

8.3

6.1

other machinery and equipment

6.3

14.8

13.9

29.6

2.1

13.6

8.3

petro-chemicals

11.5

1.6

2.6

0.5

0.7

4.1

4.3

electrical machinery and equipment

1.6

2.9

6.3

10.7

0.3

26.6

9.5

processed foods, n.e.c.

5.9

2.2

1.8

0.4

2.2

0.7

1.8

iron and steel

3.1

2.2

0.9

3.1

0.8

3.2

1.9

motor vehicles

3.5

10.6

7.2

19.0

1.4

3.1

5.1

crops, n.e.c. (except grains)

4.9

0.5

0.5

0.2

0.5

0.1

0.6

vegetables and fruits

2.2

1.0

1.5

0.0

2.3

0.1

1.9

fabricated metals

2.2

2.1

1.3

1.5

0.3

2.8

1.0

beverages and tobacco

2.6

1.2

0.4

0.1

1.8

0.1

0.4

non-ferrous metals

1.0

1.4

1.3

1.3

2.7

3.2

2.3

vegetables oils

0.3

0.2

0.3

0.0

0.1

0.3

0.8
1.2

paper, pulp, and publishing

2.6

2.6

2.0

0.7

1.0

0.7

textiles

0.8

1.7

1.2

1.4

0.6

4.0

2.5

dairy products

2.0

0.7

0.1

0.0

1.6

0.0

0.1

manufactures, n.e.c.

1.9

1.3

1.3

1.1

0.3

4.3

1.2

meats, except beef

1.8

0.5

0.6

0.0

0.2

0.2

0.2

other transport equipment

1.2

2.5

5.1

2.9

0.4

1.5

1.8

clothing

0.2

1.1

0.3

0.1

0.2

7.6

1.3

oil, gas, and coal

3.2

1.0

2.0

0.0

20.4

5.7

26.3

wood products

0.3

1.8

0.8

0.1

0.8

1.4

1.4

other goods

4.1

7.9

11.1

4.0

38.3

2.8

7.1

utilities

0.3

0.6

0.3

0.0

0.1

0.2

0.3

construction

1.1

0.7

0.4

1.6

0.1

0.2

0.3

retail and wholesale trade and warehousing

1.9

2.0

1.1

2.2

2.9

1.2

2.5

transport services

4.3

5.1

4.1

3.4

6.1

1.9

4.2

communications

1.6

0.7

0.6

0.2

0.6

0.2

0.4
0.4

other financial services

0.4

1.8

1.7

0.6

0.6

0.1

insurance

0.5

1.7

1.1

0.3

0.7

0.1

0.5

other business services

12.6

7.9

5.6

2.3

2.3

1.4

2.9

recreational and consumer services

0.9

1.6

3.0

0.6

2.2

0.2

0.7

other services (public health, education, residential)

2.1

2.1

7.4

1.2

2.6

0.2

1.0

The scenario for liberalisation
The types and degree of liberalisation are the same for the EU-US, EU-Japan and EUAus/NZ FTAs and are summarised in Table 7.5 below. This scenario is meant to reflect a
very ambitious level of opening up between OECD partners in the areas of tariffs to trade
in goods, barriers to services trade and non-tariff barriers. This means in detail:
•
Tariffs to trade in goods are liberalised by the full 100%, except for some sensitivities
in agricultural products;
•
Barriers to trade in services are reduced by 75% for all services trade. This means a
reduction of barriers from 40% to 10% in terms of trade cost equivalents;

The impact of Free Trade Agreements in the OECD

53

•

Table 7.5

Non-tariff barriers (NTBs) are reduced by 2.5% indicating a significant level of
regulatory harmonisation within the FTA.

Liberalisation scenario
Type of liberalisation

Reduction (%)

Tariffs for trade in goods (safe some sensitivities in

100%

agricultural products)
Barriers to services (average)

75%

Non-Tariff Barriers (NTBs)

2.5%

In Annex E, the import trade barriers between the Netherlands, US, Japan and
Australia/New Zealand are presented for both goods and services. The table clearly shows
sectors where tariffs and trade in services barriers have been almost or fully removed and
sectors that are more sensitive and where these barriers are still quite high. Figures 7.2
and 7.3 below summarise this graphically for goods imported into the Netherlands from
the US (green), Japan (red) and Aus/NZ (blue) and for goods imported into the US
(green), Japan (red) and Aus/NZ (blue) from the Netherlands respectively, showing the
sectors on the horizontal axis and level of import barriers on the vertical axis.
Figure 7.2

Level of import barriers in the Netherlands for FTA partners (pre-FTA)
100
90

Level of import barriers (%)

80
70
60
50
40
30
20
10

O

C

th h e
er
m
i
Pe ma cal
El t ro ch i s
Pr ec -c ne
ry
h
o c tr i
es cal em
se m ica
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od hine
Iro s, n ry
.e
n
.
M and c.
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v e el
Ve
g e Cr hic
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ta op
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bl s,
e
n
Be Fa s a .e.
b
n
ve
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ra
f
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d
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on nd et a
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ls
rro ba
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e
pu tab tal
s
lp
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pu ils
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er
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po ep
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rt
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O
e
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th
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o o nd
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c
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O odu l
th
er cts
go
od
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C Uti
on l it
st i es
ru
Tr
ct
an
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n
sp
or Tr
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t s ad
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th
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e
er m
rv e
fin mu ice
s
an ni
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th
er
er
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R si n nsu es
ec e
r
re ss anc
at
se
e
io
na rvic
l s es
er
vi
ce
s

0

Sectors (GTAP)

54

The impact of Free Trade Agreements in the OECD

th he
m
er
i
Pe ma cal
s
El t ro ch i
Pr ec - ch ne
oc tri c
em ry
es al
s e m ic a
ls
a
d
fo c hi
od ne
ry
s,
Iro
n.
e.
n
M and c.
ot
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v e el
Ve
g e Cro hic
le
ta
p
s
bl s,
e
n
Be Fa s a .e.
c.
n
ve br
d
i
ra ca
f
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s
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on nd et a
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V
p e eg
m
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r,
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pu tab tals
lp
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&
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an i ry
ti l
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ts
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po ep
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t
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on
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fin mu i ce
s
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th
s
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R si n nsu es
ec
e
r
re s s anc
s
at
io erv e
na
i
l s c es
er
vi
ce
s

O

C

Level of tariff import barriers (%)

Figure 7.3
Level of import barriers in FTA partner countries for the Netherlands (pre-FTA)
80

70

60

50

40

30

20

10

0

Sectors (GTAP)

The impact of Free Trade Agreements in the OECD

55

56

The impact of Free Trade Agreements in the OECD

8 Modelling results: Impact of an EU-US FTA

Summary of main impacts EU – US FTA
•

Dutch, EU26, and US national incomes all increase because of the EU-US FTA, and much more so in the
long-run;

•

Dutch national income is €1.38 billion higher each year in the long run because of the EU-US FTA;

•

Exports and imports increase significantly for the Netherlands, EU26 and US, with the latter experiencing
the relatively largest effects;

•

For the US, exports increase significantly more than imports (improving the US trade balance), for the
Netherlands and EU26 exports and imports increase roughly with the same amount;

•

The EU-US FTA is good for wage rates in the Netherlands, EU26 and US. In the long run, wages in The
Netherlands will be higher for both the skilled- and unskilled workers by around 0.5 percent if an FTA
between the EU and US is implemented;

•

In the US wages will also be higher, but not to the same extent as for the EU26 or The Netherlands;

•

There are negative third country effects, especially for Japan and the BRICs – in terms of national income,
trade flows and wages all of which decrease. The effects are stronger in the long-run, but in percentage
terms still relatively small;

•

For the Netherlands, iron and steel, dairy products, beverages and tobacco and petro-chemicals are
sectors that will see output increases, while manufactures, crops, and motor vehicles are decreasing in
output;

•

Exports from the Netherlands mostly increase in terms of iron and steel, petro-chemicals, vegetables and
fruits, while exports of notably motor vehicles, other transport equipment and meats decrease;

•

For the US, the largest output gains are in clothing, electrical machinery and equipment, meat, crops and
other transport equipment, while the sectors dairy products, insurance services and other machinery and
equipment contract. The export effects largely follow the output effects for the US;

•

Changes in producer prices are relatively limited. Producer prices decline for most sectors in the
Netherlands, notably for iron and steel sector, beverages and tobacco and crops. Prices in the EU26 follow
a similar pattern. Prices increase for motor vehicles in the Netherlands, an in the EU26 other transport
equipment witness an increase of producer prices. For US producers, prices in electrical machinery and
equipment and clothing are decreasing while prices for crops are going up.

In this Chapter, we present the expected impact of an ambitious EU-US FTA, including
deep tariff, barriers to services and non-tariff barrier cuts, with a time horizon of 2020.
The results are presented in two parts: macro-economic effects and sector-specific effects.

The impact of Free Trade Agreements in the OECD

57

8.1 Macroeconomic effects of the EU-US FTA
The macroeconomic effects of the EU-US FTA are presented below in Table 8.1 and
analysed in terms of national income, value changes in exports and imports and changes
in real wages for the skilled and unskilled workers.
Table 8.1

Macro economic results of an EU – US FTA on all country-blocks
NL

EU26

US

JP AUS/NZ

BRICS

ROW

Short Run (SR)
National income, million Euros
Value of exports, %

245.5

15,260.6 17,959.1

1.1

1.4

5.6

-929.9

-84.3

-1,307.0

-3,426.9

-0.4

-0.1

-0.3

-0.2

Value of imports, %

1.1

1.4

3.6

-0.4

-0.1

-0.3

-0.2

Real wages %, unskilled workers

0.2

0.3

0.2

-0.0

0.0

-0.0

-0.0

Real wages %, skilled workers

0.2

0.3

0.2

-0.0

0.0

-0.0

-0.0

34,927.4 24,061.7

-1,889.0

-115.9

-4,402.6

-8,806.5

Long Run (LR)
National income, million Euros

1,375.2

Value of exports, %

1.3

1.6

5.7

-0.4

-0.1

-0.3

-0.2

Value of imports, %

1.4

1.6

3.7

-0.4

-0.1

-0.3

-0.3

Real wages %, unskilled workers

0.5

0.5

0.3

-0.1

-0.0

-0.1

-0.1

Real wages %, skilled workers

0.5

0.5

0.3

-0.1

0.0

-0.1

-0.1

National income
Looking at the national income effects in Table 8.1, we see that a potential EU-US FTA
yields positive results for the Netherlands, EU26 and US in the short run, and even more
so in the long-run where we allow capital to flow into sectors with comparative
advantages. The Netherlands gains € 246 million on a yearly basis in the short-run and €
1.38 billion each year in the long run from the FTA. We also note that in the short-run US
gains are higher than EU26 gains, but due to the dynamic investment effect, in the longrun, EU26 gains are higher. When comparing the outcomes of the FTA for those that are
inside the FTA to the ‘outsider’ (third) countries, we find that trade and investment
diversion do occur, which can be see by Japan, Aus/NZ, BRIC and Rest of World (ROW)
losing out compared to an EU-US trade block. However, the negative third country
effects turn out to be relatively small in percentage change.
Exports and imports
If we analyse trade flow impacts of the FTA, we find that – as expected – trade and traderelated investment flows increase for the Netherlands, EU26 and US. It is interesting to
note, however, that US exports grow significantly faster than US imports, improving the
US trade balance while for the EU26 and the Netherlands export and import growth are
virtually the same. For the Netherlands exports – in the long-run – are expected to
increase by 1.3 percent due to the FTA while imports are expected to go up by 1.4
percent. In percentage change, US exports and imports are expected to go up most (5.7
and 3.7 percent respectively). Finally, also for trade flows we observe third country
effects with Japan and BRICs seeing the most significant decrease of their export and
import flows, diverted to EU-US bilateral trade.

58

The impact of Free Trade Agreements in the OECD

Wage effects for skilled and unskilled workers
The model assumes labour markets to be in equilibrium in the long run as discussed in
Chapter 7.26. We find that the EU-US FTA is good for wages for both the skilled and
unskilled. The immediate effects of the FTA will raise high-skilled wages in the
Netherlands faster than low-skilled wages, however, in the long run, this effect disappears
and wages go up by a significant 0.46 to 0.49 percent because of the FTA. For the EU26
these wage effects are the same, while also the US sees increases in wage rates, albeit at
lower levels. The overall increases in wage levels on average due to the FTA are
important because they indicate that – as we will see below when discussing sector level
effects – pull factors dominate over push factors when it comes to labour reallocation
process (i.e. labour displacement) in an economy in the short run; i.e. workers move from
one sector to another because of the prospect of earning higher wages in the new sector,
not because they are shed by the sector they have been working in previously. Finally,
there are small but negative third country effects on wages, especially for the BRIC
countries and ROW (-0.06 and -0.10 percent for unskilled workers and -0.06 and -0.09
percent for skilled workers respectively).
Decomposition of national income effects
We have noted that a potential EU-US FTA will have large positive national income
effects for the EU26, the Netherlands and the US. However, in an effect analysis, it is
important – from the perspective of policy making – to analyse where these effects
mainly originate from. Table 8.2 shows the decomposed national income effects into the
main trade policy components: tariffs, barriers to services and non-tariff measures.
Table 8.2

Decomposition of impact of the EU-US FTA on National Income (million Euros) by source
NL

Tariff rate cuts
Services barrier reductions

EU26

US

SR

LR

SR

LR

SR

LR

-108

435

1,984

9,808

2,941

4,282

40

110

4,737

7,586

5,248

7,201

Trade cost reductions

314

830

8,540

17,533

9,770

12,580

Total

246

1,375

15,261

34,927

17,959

24,062

Starting with the short-run effects, for all three blocks (EU26, the Netherlands, US) most
gains come from trade cost reductions, i.e. non-tariff measure reductions inside the EU
and across the Atlantic. However, we also see that while for the EU26 and US tariff rate
cuts would have a positive welfare effect, for the Netherlands, this component would

26

There are two general types of models that look at employment and wage effects: the first strand focuses on the short-run
and employment effects, but therefore cannot say anything about wage effects; the second strand focuses on the longerrun and wage effects, assuming markets clear in the long run, therefore not reporting employment effects. We – because of
the focus for the long-run – use a model of the second strand.

The impact of Free Trade Agreements in the OECD

59

have a negative national income effect, i.e. the losses in tariff revenue and producer
surplus outweigh positive effects for consumer prices.
When we look at the long-run effects, we find – overall – that the positive effects of
liberalisation, for all three components, are larger if not much larger than the effects in the
short-run. We also observe an interesting change in that for the EU26 and the
Netherlands, tariff rate cuts yield larger dynamic benefits than services barrier reductions,
while for the US this is the other way around (opening up the potential for different
approaches to policy making and focus of national policies). We also note that – even
though the Netherlands loses welfare in the short-run by tariff rate cuts – in the long run
the Netherlands gains significantly from doing so. Trade cost reductions (non-tariff
measure alignment) are responsible for more than 50 percent of the potential gains in an
EU-US FTA, making regulatory alignment an important policy goal in addition to tariff
and services barrier reductions.
In general this study shows that the gains from tariff rate cuts are very high, compared to
many other studies–. The main reason for this is that Doha multilateral trade
liberalisations (with a strong tariff component) – unlike in most other studies – is not in
the baseline. Therefore the tariff effects become visible as part of bilateral FTA welfare
effects.

8.2 Sectoral effects of the EU-US FTA
The sector-level effects of the EU-US FTA are presented in the Annex; The Tables
contain sector-level effects on output value, export value, producer prices and
employment of high- and low-skilled workers.

8.2.1

Sectoral impact on the Netherlands and the EU26
Whereas the overall macroeconomic effects for both the EU26 and the Netherlands are
positive in terms of national income, effects at sector level may either be positive or
negative. As a result of the FTA, resources shift across sectors – in the long run including
dynamic capital – according to relative comparative advantages. Therefore, in short, some
sectors gain and some loose.
Output
These shifts across sectors can be clearly seen from the output changes at sector level.
Table 8.3 lists the sectors that show most pronounced percentage changes in output for
the Netherlands (five most negative and five most positive in percentage changes).
Output in the Dutch iron and steel sector is expected to grow by 5.6 percent as a result of
this EU-US FTA because it is a relatively small sector, largely in the hands of an efficient
company using scale economies in production and easy access to raw materials, allowing
Dutch production to be competitive; for the dairy products sector output growth is 2.5
percent, also because the Dutch dairy sector is very competitive. In contrast, the other
transport equipment and motor vehicles sectors are projected to decline (-3.6 percent and
-2.9 percent respectively).

60

The impact of Free Trade Agreements in the OECD

Table 8.3

Most impacted sectors (% output change) for the Netherlands, EU-US FTA, long run
Sector

Output

Sector

Output

(top 5 positive impact)

change (%)

(top 5 negative impact)

change (%)

Iron and steel

5.6

Other transport equipment

-3.6

Dairy products

2.5

Motor vehicles

-2.9

Beverages and tobacco

2.1

Meats, except beef

-2.4

Petro-chemicals

1.7

Crops, n.e.c. (except grains)

-1.3

Vegetables and fruits

1.1

Manufactures, n.e.c.

-0.6

When relating the percentage changes at sector level (Annex B) to the share of value
added of that sector to the economy (see chapter 7.2.3) in 2020 (baseline projection), we
see that a 0.4 percentage increase in the other business services sector has the largest
impact in absolute terms for the Dutch economy, followed by the 0.4 percent increase in
other services (public health, education, residential) and the 0.5 percent in construction.
Transport services and iron and steel also cause a considerable positive change in
absolute terms.
For the EU26, as presented in Table 8.4, we find that the largest positive percentage
effects are found in insurance services (1.7 percent), dairy products (1.6 percent), motor
vehicles (1.2 percent) and textiles (1.1 percent) in the long run. A direct, short-run,
positive effect is most pronounced in dairy products and insurance services. Insurance
services are much more fragmented in the US at state level than in the EU, and overall the
EU automotive industry is more competitive than its US counterpart at present due to
lower cost levels of production and a technological advantage in green technologies.
In the sectors meat (-3.8 percent), other transport equipment (-3.1 percent), crops (-1.5
percent) and electrical machinery and equipment (-1.3 percent), the EU26 has a relative
comparative disadvantage, implying that production factors will move to other sectors
(like those mentioned above). When comparing short run (direct) effect to the longer-run
effect, we see that notably the electrical machinery does relatively better in the long run
due to investments that will flow into the sector.

Table 8.4

Most impacted sectors (% output change) for the EU26, EU-US FTA, long run
Sector

Output

Sector

Output

(top 5 positive impact)

change (%)

(top 5 negative impact)

change (%)

Insurance

1.7

Meats, except beef

-3.9

Dairy products

1.6

Other transport equipment

-3.5

Motor vehicles

1.2

Crops, n.e.c. (except grains)

-1.5

Textiles

1.1

Electrical machinery and equipment

-2.4

Other machinery and equipment

0.7

Vegetables and fruits

-0.1

Weighing the percentage change effects with the relative shares in value added, that is:
taking into account the relative importance of sectors for the EU26 economy, we see that
The impact of Free Trade Agreements in the OECD

61

the largest positive expected absolute changes in the long run relate to other machinery
and equipment (+0.7 percent), construction, other business services and other services,
while the largest negative changes in the long run are expected in the sectors other
transport equipment (-3.5 percent) and crops production (-1.5 percent).
Thus, whereas the most pronounced relative changes are found in goods sectors, some
services sectors – given their large absolute size – show the largest impacts in absolute
terms, both in the Netherlands and in the EU26.
The apparent contradiction between an EU26 level rise in automotive production and
decline in Dutch automotive output can be explained by the different levels of trade and
production in the EU (final goods versus parts and components). It looks like final
automotive production in the EU will increase but the parts and components the Dutch
economy is supplying in that process is facing much stronger competition from the US
because of the EU-US FTA. Combined with growth in other sectors, this implies that
costs for labour are going up, prices go up and output falls, which does not happen in the
EU26.
Exports
The changes in export value at sector level closely follow the output figures as discussed
above. For the Netherlands, the sector dairy products and iron and steel also show the
largest percentage increases in (6.5 and 6.1 percent respectively). Petro-chemicals and
textiles are expected to increase their exports by 3.1 percent. The sector motor vehicles is
expected to see a decline in export value of 3.3 percent, followed by other transport
equipment (-2.6 percent) and meats (-2.5 percent).
When relating the export values to the share of that sector in total exports for the
Netherlands, the contribution in absolute terms is again considerable from the other
business services sector, being the largest sector in the Dutch economy. Yet the largest
absolute gains in export value are to be expected from the two largest Dutch export
sectors after business services, the petro-chemicals sector followed – at some distance –
by chemicals, rubber and plastics. Iron and steel also contribute see considerable absolute
changes. On the other hand, motor vehicles, other transport equipment and meats are
sectors that are expected decline.
Table 8.5

Most impacted sectors (% export change) for the Netherlands, EU-US FTA, long run
Sector

Export

Sector

Export

(top 5 positive impact)

change (%)

(top 5 negative impact)

change (%)

Dairy products

6.5

Motor vehicles

Iron and steel

6.1

Other transport equipment

-3.3
-2.7

Petro-chemicals

3.1

Meats, except beef

-2.5

Textiles

3.1

Oil, gas, and coal

-0.2

Beverages and tobacco

2.7

Electrical machinery and equipment

-0.1

For the EU26, exports increase for most sectors and decrease only for a few; moreover,
the percentage change increases predicted are much larger than the anticipated decreases.
The largest percentage change increases in exports due to an EU-US FTA at sector level
accrue to the dairy sector (+11.5 percent), insurance services (+7.6 percent), crops
62

The impact of Free Trade Agreements in the OECD

production (+7.3 percent), and financial services sector (+5.9 percent). The largest
decreases in exports concentrate in the meats(-2.5 percent) and other transport equipment
sectors (-2.7 percent).
In absolute values – weighed by share in total exports – the 2.4 percent increase in other
machinery and equipment is most important (14.8 percent of total EU26 value added),
followed by the increased exports in motor vehicles, chemicals, rubber & plastics, and
insurance services.
Table 8.6

Most impacted sectors (% exports change) for the EU26, EU-US FTA, long run
Sector

Export

(top 5 positive impact)

change (%)

Sector

Export

(top 5 negative impact)

change (%)

Dairy products

11.5

Meats, except beef

Insurance

7.6

Other transport equipment

-2.8
-1.3

Crops, n.e.c. (except grains)

7.3

Electrical machinery and equipment

-0.8

Other services (public health,
Other financial services

5.9

education, residential)

-0.4

Manufactures, n.e.c.

4.5

Vegetables and fruits

-0.1

Producer prices
The changes in producer prices in the Netherlands that are expected as a result of this
EU-US FTA relate logically to the observed changes in output and export values. As a
result of increased competitive pressure and international specialisation, prices in the
sectors that are increasing their output and exports considerably, experience a slight
downward effect on producer prices. The price effects (in percentage changes) for the
different sectors in the Netherlands in the long run are negative; that is: most prices go
down following a potential ambitious EU-US FTA. They go down mostly for beverages
and tobacco (-1.9 percent), iron and steel (-1.1 percent) and crops (-0.9 percent).
However, at the same time we also observe an increase in the prices for motor vehicles
(by 0.6 percent), again, because of competition for workers with other growing – and
closely linked – sectors, while US competition for producing parts and components
increases.
In the EU26, we see a similar picture of price changes as in the Netherlands (e.g. prices
of crops drop), but we also find that prices in other transport equipment rise.
Like in the Netherlands (and as we will see below in the US) we see an overall increase in
prices of the services sectors. This can be explained, first of all, by the fact that the large
shocks applied in terms of barrier reductions lead to significant changes in, for example,
automotives, electrical machinery and production of processed foods. These shocks pull
in resources in terms of service inputs needed for these increases in manufacturing
production. Secondly, income elasticities are typically higher for services than for goods;
i.e. when incomes goes up (as they do because of the EU-US FTA) demand for services
increases more than demand for manufacturing products. This secondary effect, relatively
faster increasing demand for services, also leads to higher prices for services.

The impact of Free Trade Agreements in the OECD

63

Sectoral impact comparison between the Netherlands and EU26
When comparing the sectoral impact between the Netherlands and the rest of the EU, the
EU26, some interesting observations stand out:
•
The Dutch iron & steel sector production gains much more from the EU-US FTA
than the sector gains in the rest of the EU (a gain of 5.6 percent for the Netherlands
versus a gain of 0.2 percent for EU26) as presented in Table 8.7 below;
•
As presented in Table 8.7 below, the effect of the EU-US FTA on output of the
beverages and tobacco sector, the meat sector, the vegetables & fruits, petrochemicals, electrical machinery and dairy products sectors in the Netherlands is more
positive than the effect of the FTA on the same EU26 sectors;
•
However, we also find – see Table 8.7 – that the effect of the EU-US FTA on the
Dutch economy is more negative for motor vehicles, insurance services, and other
manufactures than for the same sectors in the EU26;
•
The reason for Dutch output increases in the dairy sector that exceed EU26
percentage increases in production while Dutch exports are growing at a slower pace
(in percentage terms) than EU26 exports, can be explained by the fact that the Dutch
share of dairy products in total exports is much larger to begin with and the EU26
starts off from a much lower relative base to begin with.
Table 8.7

Comparison of Dutch and EU26 sector effects for selected sectors (output %, exports %) from an EU-US FTA,
long run
Sector

Change (%) for the

Change (%) for the EU26

Netherlands
Output
Iron and steel

5.6

0.2

Beverages and tobacco

2.1

0.2

Meats (except beef)

-2.4

-3.8

Vegetables and fruits

-1.1

-0.1

Petro-chemicals

1.7

0.5

Electrical machinery and equipment

-0.1

-1.3

Dairy products

2.5

1.6

Other manufactures

-0.6

0.7

Insurance services

0.3

1.7

Motor vehicles

-2.9

1.2

Exports

64

Iron and steel

6.1

0.5

Beverages and tobacco

2.7

1.0

Vegetables and fruits

0.9

-0.1

Electrical machinery and equipment

-0.1

-0.8

Utilities

0.6

-0.1

Other manufactures

0.2

4.5

Crops

2.6

7.3

Dairy products

6.5

11.5

Motor vehicles

-3.3

2.5

Insurance services

1.7

7.6

The impact of Free Trade Agreements in the OECD

8.2.2

Sectoral impact on the US
Output
The most affected sectors in the long-run, following an ambitious EU-US FTA turn out to
be textiles (+16.7 percent), electrical machinery and equipment (+6.3 percent), meats
(+4.0 percent), crops (+3.4 percent), and other transport equipment (+3.3 percent), dairy
products (-3.6 percent), insurance services (-1.4 percent), and other machinery and
equipment (-1.0 percent). In general differences between the short-run and long-run
effects in output are small, with the exception of electrical machinery and equipment.
This latter sector, due to a significant inflow of investments, will increase output by 1.5
percentage points in the long run compared to the short run due to strengthened
comparative advantage. The most important sectors in terms of percentage output
changes are presented in Table 8.8 below.

Table 8.8

Most impacted sectors (% output change) for the US, EU-US FTA, long run
Sector

Output

Sector

Output

(top 5 positive impact)

change (%)

(top 5 negative impact)

Change (%)

Clothing

16.7

Dairy products

-3.6

-1.4

Electrical machinery and
equipment

6.3

Insurance

Meats, except beef

4.0

Other machinery and equipment

-1.1

Crops, n.e.c. (except grains)

3.4

Iron and steel

-0.8

Other transport equipment

3.3

Other goods

-0.6

Weighing the percentage changes based on the respective value added of each sector as
share of total national value added, we find that the small percentage increase (0.2
percent) in retail and wholesale trade is important economy-wide and so are the increases
in output for the construction sector and other business services. Important also are
electrical machinery and equipment and other transport equipment. On the downward
side, insurance services and other machinery and equipment are sectors that decline –
with a significant impact on value-added weighed output for the US.
Exports
The effects of the EU-US FTA on US exports are very positive overall, especially for
exports of crops (+53.9 percent), other transport equipment (+12.5 percent), electrical
machinery and equipment (+11.1 percent), motor vehicles (+8.6 percent). Also clothing,
dairy products and meats see large increases in exports but these increases are relatively
smaller in absolute terms. The public services and utilities sectors – as a consequence of
the EU-US FTA – are expected to export less (-0.9 percent and -0.8 percent respectively)
as well as the iron and steel sector (-0.2 percent) but only marginally so. All other sectors
experience an export increase. Table 8.9 summarises these findings.
Table 8.9

Most impacted sectors (% exports change) for the US, EU-US FTA, long run
Sector

Export

Sector

Export

(top 5 positive impact)

change (%)

(top 5 negative impact)

Change (%)

Crops, n.e.c. (except grains)

53.9

The impact of Free Trade Agreements in the OECD

Other services (public health,

-0.9

65

education, residential)
Dairy products

45.3

Utilities

-0.8

Meats, except beef

35.5

Iron and steel

-0.2

Clothing

31.4

Other transport equipment

12.5

Producer prices
Like in the EU and the Netherlands, producer prices do not change a lot as a consequence
of the EU-US FTA in the US. For US producers, prices in electrical machinery and
equipment (-0.7 percent) and clothing (-1.9 percent) are decreasing while prices for crops
are going up (+1.7 percent). As for the EU26, we find that producer prices for services in
the US go up across the board (albeit marginally). This can be explained – as mentioned
before – by services inputs needed for increases in manufacturing production and a higher
demand elasticity for services.

8.2.3

Sectoral impact on third countries: selection of most significant results
Whereas the Netherlands, EU26 and US are inside the scope of the potential EU-US
FTA, the other countries in the world are not. We provide a short analysis of output,
exports and producer price effects the EU-US FTA has for third countries as long as there
are significant effects. The countries that do not participate in the FTA and that have been
grouped together for this analysis are Japan, Australia/New Zealand, BRIC and Rest of
World (ROW).
Output
The global automotive effects of the EU-US FTA are interesting to note and analyse.
Australia & New Zealand benefit from a more integrated EU-US automotive market
through parts and components trade. The Japanese sectoral output in the long run is
however affected negatively for motor vehicles (-2.2 percent) due to increased
competition from EU and US automakers. The more integrated EU-US market also
affects ROW automotive production negatively (-1.3 percent). Turning to electrical
machinery and equipment, we see that the Japanese sector benefits from the EU-US
agreement (+0.5 percent) while the BRICs and ROW lose out (-0.7 percent change for
both blocks in electrical machinery and equipment outputs). Here the US-Japanese
integration in electronic equipment may cause the positive effects for Japan since the US
sector gains a lot, while this goes at the expense of those blocks where integration with
the US is either indirect (via Japan) or more shallow, leading to trade diversion. ROW
also is shown to show a lower growth rate in textiles (especially technical textiles) (-0.4
percent) and other transport equipment (-0.9 percent).
Exports
Export patterns overall mimic (though with higher levels of change) the output changes:
Japanese automotive exports (both final products as well as parts and components) will
decrease significantly (-4.1 percent) while Australian & New Zealand exports will go up
by 1.3 percent and ROW trade in automotives and parts and components declines by 1.3
percent. For electrical machinery and equipment, Japanese exports go up (+0.6 percent)
while BRIC and ROW export trade go down (-1.1 percent and -0.7 respectively). These

66

The impact of Free Trade Agreements in the OECD

findings reflect shifting comparative advantages and existing interlinkages in trade in
intermediate goods between the trade blocks. Another export effect of the EU-US FTA is
a decrease in Japanese exports of meat (except beef) by 1.8 percent, and in Aus/NZ meat
exports by -1.4 percent.
Producer prices
The producer price effects on third countries are very small though mostly negative
across the third country economies with no particular sector standing out. This is the trade
diversion effect showing the decreases in production faced by third country producers.

The impact of Free Trade Agreements in the OECD

67

68

The impact of Free Trade Agreements in the OECD

9 Modelling results: Impact of an EU-Japan
FTA

Summary of main results of an EU-Japan FTA
•

The EU-Japan FTA is beneficial for the Netherlands in terms of national income, both in the short run
(€176 million) and long run (€458 million);

•

The FTA is also very beneficial for Japan (€45,300 million increase in national income) because of
significant increases in market access to the EU, but not beneficial for the EU26 (€14,000 million decrease
in national income) because of significant losses of tariff revenues;

•

Tariff rates and tariff revenues – because the Doha Development round is not in the economic baseline –
drive the results for the EU-Japan FTA;

•

Dutch gains stem from increased trade from which the Dutch economy benefits disproportionately through
Mainport Rotterdam and increased access for processed foods (including meat), a sector relatively more
important for the Dutch economy than for the EU26 as a whole;

•

The EU-Japan FTA benefits Australia/NZ and BRICs because of the increased trade and demand for parts
and components from Japan. For the US and ROW trade diversion dominates.;

•

Wages are virtually unchanged for the EU26 (-0.1) and the Netherlands (+0.1) but Japanese wages go up
by 1.7 percent for skilled workers and 1.6 percent for unskilled workers;

•

The main sectoral output effects for the Netherlands occur in the meat sector (+9.9 percent), electrical
machinery and equipment (-3.4 percent) and dairy products (-8.9 percent). For the EU26, also the meat
sector benefits (+13.1 percent) while motor vehicles declines in output by 8.3 percent;

•

Trade (exports) increases significantly for the Netherlands, EU26 and Japan – with a lot of trade creation in
the meat and automotives sectors – at the expense of US, Australia/NZ, BRIC and ROW;

•

For Japan, the sector benefiting most significantly is the automotive sector (output gains of +53.4 percent)
– this is the main effect of the FTA for Japan, drawing in production factors from other sectors;

•

Price levels in the Netherlands and EU26 are not heavily affected, but rise significantly overall in Japan
due to the large positive national income effect, with the exception of the automotive sector (-12.0 percent)
and meat sectors (-2.2 percent);

•

Third country automotive and meat sectors are hurt most by the integrated EU-Japan automotive and meat
markets, but the electrical machinery and equipment sector gains globally.

In this Chapter, we present the expected impact of an ambitious EU-Japan FTA, including
deep tariff, barriers to services and non-tariff barrier cuts, with a time horizon of 2020.
The results are presented in two parts: macro-economic effects and sector-specific effects.

The impact of Free Trade Agreements in the OECD

69

9.1 Macroeconomic effects
The overall effects of the EU-Japan FTA are presented below in Table 9.1. They are
analysed in terms of national income, value changes in exports and imports and changes
in real wages for the skilled and unskilled workers.
Table 9.1

Deleted: Table 9.1

Macro economic results of an EU – Japan FTA on all country-blocks
EU-Japan FTA,

NL

EU26

JP

US

AUS/NZ

BRICS

ROW

National income, million Euros

176

-10,950

22,663

GDP value, percent

0.1

-0.1

2.4

-1,321

304

208

-563

0.1

-0.1

0.3

0.2

Value of exports, %

0.7

0.5

Value of imports, %

0.7

0.5

9.1

0.5

0.5

0.2

0.3

10.4

0.3

0.5

0.2

Real wages %, unskilled workers

0.1

-0.1

0.3

1.1

-0.0

-0.0

0.0

-0.0

Real wages %, skilled workers

0.1

-0.0

0.8

-0.0

-0.1

0.0

-0.1

National income, million Euros
GDP value, percent

458

-13,998

45,276

-3,004

203

911

-7,516

0.2

-0.1

3.2

0.1

-0.2

0.3

0.1

Value of exports, %

0.7

0.4

9.8

0.5

0.5

0.2

0.2

Value of imports, %

0.8

0.4

11.2

0.3

0.5

0.2

0.2

Real wages %, unskilled workers

0.1

-0.1

1.6

-0.0

-0.2

0.0

-0.2

Real wages %, skilled workers

0.1

-0.1

1.7

-0.0

-0.1

0.0

-0.1

Short run

Long run

National income
Looking at the national income effects in Table 9.1, we see that a potential EU-Japan
FTA yields very interesting and very different results when compared to the EU-US FTA.
A deep and comprehensive FTA with Japan will be beneficial for the Netherlands, both in
the short-run (€ 176 million extra yearly) and the long-run (€ 458 million extra per year).
This is due to the fact that increases in trade flow benefit the Netherlands
disproportionally because of the Mainport Rotterdam and because the FTA allows the
Dutch economy much better food access (processed food, meat products) to Japan –
which is relatively more important for the Netherlands than for the EU as a whole.
Moreover the Dutch trade in parts and components for the automotive sector, due to its
specific areas of specialisation and integration with the global automotive supply chain,
also benefit from an EU-Japan FTA.
We also note that the FTA is very beneficial for Japan – especially in the long run –
where Japan gains € 45.3 billion in additional national income because of an FTA with
the EU. This is the case because for Japan, the EU market opens up completely and it
allows Japanese firms in particular and the Japanese economy in general to benefit
significantly from scale economies and enlargement of its global production networks.
However, for the EU26 the welfare effects are clearly and significantly negative,
especially in the long run (a loss in national income of € 14.0 billion each year because of
the EU-Japan FTA). These results, though surprising at first, are intuitive when studied in
more detail. The explanations for these results are the following:

70

The impact of Free Trade Agreements in the OECD

Deleted: Table 9.1

1. Please note that in the baseline the Doha Development Agenda (DDA) is not
included, which implies that still very high tariff rates are in place between the EU
and Japan before the FTA is concluded.
2. With tariff rates constituting a major component of welfare effects – compared to
trade in services barriers and non-tariff measures – a full cut of tariffs (as postulated
in the scenario) implies that tariff losses are very large. The large negative tariff cut
effect due to significant loss of tariff revenues; explain the negative EU26 national
income effect because this effect is not compensated by gains from services barrier
reduction and/or lower trade costs.
3. Tariff losses are a negative welfare effect as government incomes decrease
significantly. However, this can be compensated for by gains for companies and
consumers due to increased market access and lower prices for imported products
respectively. However, the assumption of DDA not being in the baseline combined
with a bilateral (as opposed to a multilateral) FTA means that the full weight of large
tariff losses falls onto the EU without major increases in market access (as only Japan
lowers its tariffs and large NTMs remain) or much lower prices (Japan is not the
cheapest producer of many products). For Japan the gain in market access (large EU
market) and lower import prices (EU is efficient in some manufacturing and service
sectors) is much larger than for the EU, more than compensating Japan for loss in
tariff revenues. If the EU and Japan would multilaterally reduce all tariffs – the loss
in tariff revenue for the EU would be compensated by much larger increases in
producer and consumer surplus that is the case in a bilateral reduction.
4. In essence, the main gains accrue to the partner in the FTA with the highest trade
barrier reductions (Japan) because reducing these will lead to more and cheaper
imports leading to large consumer gains. That effect occurs to Japan (through cheap
imports from the EU) but not much to the EU since the economy was already more
open and therefore the consumer gains are smaller.
Looking at third country effects, the impact of an EU-Japan FTA is mixed. The US and
ROW see trade and investments diverted away towards the trade block leading to losses
in national income (albeit of a limited magnitude). For Aus/NZ and BRIC, we find that
the EU-Japan FTA is potentially beneficial. The main reasons for this is that the very
large increase in national income for Japan spills over to its Asian trade and investment
partners. Japan is an important source for FDI and a main trade partner in the region. This
happens through complex (large company) inter-linkages with 2nd and 3rd generation
countries in the region (see the Flying Geese model of Akamatsu, 1939)27: Japanese
industrial benefits from the EU-Japan FTA spill over into the region due to regional trade
and FDI links and regional sourcing of parts through large Japanese multinationals that
operate in the region.
Exports and imports
If we analyse trade flow impacts of the FTA, we see that because of a deep EU-Japan
FTA world trade increases significantly, with all blocks increasing the value of their
exports and imports. The largest effects occur for Japan where – in the long run – the
value of exports go up by 9.8 percent and imports by 11.2 percent. For the EU26 trade
27

Akamatsu K.(1962): A historical pattern of economic growth in developing countries. Journal of Developing Economies,
1(1):3-25, March-August.

The impact of Free Trade Agreements in the OECD

71

goes up by around 0.45 percent (both imports and exports) but for the Netherlands –
mainly due to the Mainport Rotterdam effect – the increases in the value of exports and
imports are higher; 0.7 and 0.8 percent respectively. For the Netherlands we also find
evidence of a dynamic investment effect because the long-run growth in the value of
exports and imports is larger than the immediate effect.
Wage effects for skilled and unskilled workers
For Japan, the EU-Japan FTA is highly beneficial for employees. The skilled workers see
their wages increase rapidly by 0.8 percent and over time by 1.7 percent, while the
unskilled workers see such an increase from 1.1 to 1.6 percent. It is interesting to see that
the immediate effect on wages benefits the unskilled workers more, while in the long run,
skilled workers benefit relatively more from the FTA. For the Netherlands a modest
increase in wages is foreseen, albeit larger when we allow for dynamic investment effects
in the long run. The EU26 is expected to experience a decrease in wages, especially for
unskilled workers soon after the implementation of the FTA and especially for the skilled
workers in the more distant future. Overall the wage effects are in line with the national
income effects. An exception is the Aus/NZ block. This block shows positive national
income effects but lower wages. This implies that downward price effects and export
effects play a role, leading to benefits for consumers and larger markets and demand for
Aus/NZ produced products respectively, outweighing the decrease in real wages.
Table 9.2

Decomposition of impact of the EU-Japan FTA on National Income (million Euros) by source
NL

EU26

JP

SR

LR

SR

LR

SR

LR

Tariff rate cuts

184

446

-12,065

-16,309

17,545

35,556

Services barrier reductions

-11

-1

1,164

1,977

663

1,170

3

12

-48

334

4,455

8,550

176

458

-10,950

-13,998

22,663

45,276

Trade cost reductions
Total

Decomposition of national income effects
Decomposing the national income effects, we see clearly that the negative effect of an
EU-Japan FTA is driven by losses in tariff revenues that come from ambitious tariff rate
cuts. Reductions in services barriers and non-tariff measure alignment would – in the long
run – yield substantial benefits for the EU26. For the Netherlands – on the contrary – not
much is to be gained from reductions in services barriers or the modelled depth of
reductions in trade costs. Most gains in the long run for the Netherlands stem from the
same tariff rate cuts that have a negative effect on the EU26 as a whole. Again, the main
reasons for these diverging effects are the Main port Rotterdam and the relative
importance of the Dutch processed foods and dairy sectors. For Japan, the lion’s share of
gains come from tariff rate cuts, even though non-tariff measure reductions also yield
significant benefits. The dynamic, long-run effects are significantly more positive for
Japan (and the Netherlands) than the direct effects of FTA implementation.

72

The impact of Free Trade Agreements in the OECD

9.2 Sectoral effects

9.2.1

The macro-economic effects show a mixed picture with respect to the effects of the EUJapan FTA (Annex C). Especially for the EU26, the welfare effects – driven by losses in
tariff revenue – are negative even though the EU is a partner in the FTA.
Sectoral impact on the Netherlands and the EU
Output
The main positive effects at sectoral level for the Netherlands, occur in the sectors meats
(+9.9 percent), motor vehicles (+2.0 percent), processed foods (+1.2 percent), and
clothing (+0.7 percent). Resources are drawn into those growing sectors from iron and
steel (-0.5 percent), electrical machinery and equipment (-3.4 percent) and dairy products
(-8.1 percent). These results can partially be explained by Dutch and Japanese
comparative advantages but more so even by looking at the tariff reductions (e.g. a
reduction of 100 percent of the 224 percent tariff on dairy imports from Japan) and the
implications thereof for market access. When comparing the short run effects of the FTA
with the long-run effects, we see that motor vehicles benefit from an inflow in
investments, strengthening its competitive position further (growth in output goes up
from 1.5 percent in the short-run to the aforementioned 2.0 percent in the long run), while
for iron and steel the immediate decrease in output (-1.2 percent) is mitigated by inflows
of capital into the sector to a decrease of -0.5 percent in output.
If we weigh these results by the sectors’ value added, we find that the dairy sector faces
the largest negative output effects, while transport services, meats and processed foods
are those sectors that stand most to gain.

Table 9.3

Most impacted sectors (% output change) for the Netherlands, EU-Japan FTA, long run
Sector

output

Sector

output

(top 5 positive impact)

change (%)

(top 5 negative impact)

change (%)

Meats, except beef

9.9

Dairy products

-8.1

Motor vehicles

2.0

Electrical machinery and equipment

-3.4

Processed foods, n.e.c.

1.2

Iron and steel

-0.5

Clothing

0.7

Other transport equipment

-0.5

Transport services

0.5

Beverages and tobacco

-0.4

For the EU26, as presented in Table 9.4, we see that meats (+13.1 percent), clothing
(+2.2 percent), textiles (+1.8 percent) and other transport equipment (+1.3 percent) are
the sectors that benefit from the EU-Japan FTA in the long run while the motor vehicles
sector especially (-8.3 percent), but also – to a lesser extent – iron and steel (-0.8 percent)
and fabricated metals (-0.5 percent) see their output decline compared to the economic
baseline development. Given the negative wage effects of the FTA for the EU26, this
implies in these sectors jobs are likely to be shed as the sectors shrink and the effects of
the EU-Japan FTA for the EU26 are driven by its effects on the motor vehicles sector. No
significant dynamic investment effects occur to cause a difference between short- and
long-run effects for the EU26.

The impact of Free Trade Agreements in the OECD

73

If we weigh the percentage changes based on share of a sector’s value added, we find that
the importance of the motor vehicles sector, and the way it is negatively affected by the
EU-Japan FTA stands out, but so do other business services where a small negative
percentage change causes significant effects on economy-wide value added due to the
sheer size of the sector (20.1 percent of total EU26 value added). Meats – because of the
large percentage change of a small base sector – and electrical machinery and equipment
– because of a small percentage change of a relatively large sector – dominate the positive
side of the results when including value added shares as weights.
Table 9.4

Most impacted sectors (% output change) for the EU26, EU-Japan FTA, long run
Sector

output

(top 5 positive impact)

change (%)

Sector

output

(top 5 negative impact)

change (%)

Meats, except beef

13.1

Motor vehicles

Clothing

2.2

Iron and steel

-8.3
-0.8

Textiles

1.8

Fabricated metals

-0.5

Other transport equipment

1.3

Other services (health, education)

-0.1

0.7

Other business services

-0.1

Electrical machinery and
equipment

Exports
The effects of the EU-Japan FTA on Dutch exporting sectors – when compared to output
effects – tend to be in line. The meat sector (+12.7 percent), processed foods (+3.1
percent) and transport services (+1.0 percent) are sectors where sectoral output increases
and also export increases are predicted. In sectors where output is projected to decline,
also exports go down: electrical machinery and equipment (-3.7 percent), iron and steel (0.6 percent), other transport equipment (-0.4 percent) and beverages and tobacco (-0.4
percent).
A major exception to this proportionate effect is the dairy sector, where sector output
declines significantly, but Dutch exports increase. This is likely due to the very high tariff
rates that exist on both sides. Removing the lion’s share of these tariff rates as part of the
ambitious FTA leads to a more competitive dairy market between the Netherlands (EU)
and Japan and a reduction in domestic market shares in favour of imports. At the same
time significant trade creation between the two trade partners and trade diversion with the
rest of the world occurs (export changes of US -2.0 percent, Aus/NZ -2.3 percent, BRIC 1.3 percent and ROW -0.5 percent).
Overall, when comparing the import tariffs on Japanese products with the projected
export changes after removing these import tariffs, we find that the EU-Japanese FTA is
by and large driven by tariffs; i.e. tariff rates are relatively high for all top-5 sectors
mentioned in the left column of Table 9.5 (see analysis of dairy products above), and
removing them leads to significant trade creation between the Netherlands and Japan.

74

The impact of Free Trade Agreements in the OECD

Table 9.5

Most impacted sectors (% export change) for the Netherlands, EU-Japan FTA, long run
Sector

Export

(top 5 positive impact)

change (%)

Sector

Export

(top 5 negative impact)

change (%)

Meats, except beef

12.7

Electrical machinery and equipment

-3.7

Dairy products

6.2

Fabricated metals

-0.7

Processed foods, n.e.c.

3.1

Iron and steel

-0.6

Other financial services

1.2

Beverages and tobacco

-0.4

Transport services

1.0

Other transport equipment

-0.4

Looking deeper into export changes, we also find that exports in the services sectors
increase – not a lot in percentage changes – but broadly across all service sectors. This is
a general equilibrium effect, whereby workers in the long run are transferring from some
of the declining manufacturing sectors into services sectors, output and exports in those
sectors will increase. also leading to increases in export flows.
Turning to the EU26, its exports increase in all but two sectors of the economy (motor
vehicles, -8.5 percent and iron and steel, -0.6 percent). The largest increase in exports is
in the meat sector (+49.1 percent) – which seems large but is a percentage change of a
relatively small base – clothing (+5.7 percent), dairy products (+4.0 percent) and textiles
(+3.0 percent). These results are essentially the consequence of dropping tariff rates in
previously protected sectors (i.e. in sensitive sectors like dairy products and meats) and of
specialisation effects that work negatively for the motor vehicles sector and its exports.
Table 9.6

Most impacted sectors (% export change) for theEU26, EU-Japan FTA, long run
Sector

Export

(top 5 positive impact)

change (%)

Sector

Export

(top 5 negative impact)

change (%)

Meats, except beef

49.1

Motor vehicles

-8.5

Clothing

5.7

Iron and steel

-0.6

Dairy products

4.0

Textiles

3.0

Manufactures, n.e.c.

2.3

Producer prices
For the Netherlands, the EU-Japan FTA has only a very limited effect on producer
prices. In the long-run, for none of the sectors analysed price changes exceed 0.5 percent
in absolute terms. Immediate effects of the FTA lead to increases in the prices for
beverages and tobacco (+0.5 percent) and electrical machinery and equipment (+0.6
percent). For the EU26, the only major price change relates to the motor vehicles sector
where prices are expected to go up – both in the short-run (+1.8 percent) and long-run
(+1.9 percent). This is a significant increase that reflects the negative impact of the FTA
on the EU automotive sector. The effect for consumer prices is likely to be less negative
due to cheaper automotive imports.

The impact of Free Trade Agreements in the OECD

75

Sectoral impact comparison between the Netherlands and EU26
When comparing the sectoral impact between the Netherlands and the rest of the EU, the
EU26, some interesting observations stand out:
•
For many sectors, Dutch and EU26 output growth and decline are in line with each
other:
o Potential growth in output in meats, clothing, processed foods, transport
services;
o Potential decline in output in iron and steel, and fabricated metals;
•
However, in the sectors motor vehicles, other transport equipment, electrical
machinery and equipment, and dairy products Dutch and EU26 output effects (see
above) run in opposite directions. This is because of large changes in tariff lines
(dairy sector: -8.1 percent for the Netherlands versus +0.6 percent for the EU26),
trade in parts and components that is different from final product trade (motor
vehicles (+2.0 percent for the Netherlands versus -8.3 percent for the EU26) and
electrical machinery and equipment: -3.4 percent for the Netherlands versus +0.7
percent for the EU26), and general equilibrium wage and welfare effects;
•
EU26 exports of meat increase by 49.1 percent and Dutch exports for that sector
increase by 12.7 percent. These are both increases, but the order of magnitude is
much higher for the EU26 than for the Netherlands. This, again, can be explained by
changes on a relatively small base for the EU26 versus the Netherlands (where the
meat sector is relatively larger and more important).

9.2.2

Sectoral impact on Japan
The EU-Japan FTA has a profound impact on the Japanese economy. As shown under the
macro-economic heading, the overall national income effects – especially in the long-run
– are large and positive and wage increases are significant.
Output
In case of an EU-Japan FTA, the Japanese automotive sector drives the sector-specific
results with a very significant increase in output of 53.4 percent. Also benefiting, though
only marginally compared to motor vehicles are construction (+1.4 percent), iron and
steel (+1.8 percent), other services (+1.0 percent) and retail and wholesale trade and
warehousing (+0.8 percent). The large amount of resources, both in human and physical
capital, needed for increased production of motor vehicles, comes from other machinery
equipment (-15.0 percent) and electrical machinery and equipment (-7.2 percent). Capital
is also drawn from meats (-84.5 percent decline in output though over a small base),
textiles (-14.8 percent) and clothing (-6.9 percent). Service sectors in Japan tend to see
increases in production due to the very high amount of service support needed for the
motor vehicles sector. Also the decline in sectors like textiles, other machinery and
equipment and meats as shown in the Table 9.7 below, is mainly due to ‘pull factors’, i.e.
the increase in demand for labourers in the motor vehicle sector pushes wages in that
sector up, causing workers to want to move to that sector, away from, for example, other
machinery and equipment or electrical machinery and equipment, where wages are not
going up: specialisation is taking place.

76

The impact of Free Trade Agreements in the OECD

Table 9.7

Most impacted sectors (% output change) for Japan, EU-Japan FTA, long run
Sector

output

(top 5 positive impact)

change (%)

Sector

output

(top 5 negative impact)

change (%)

Motor vehicles

53.4

Meats, except beef

-84.5

Construction

1.4

Other machinery and equipment

-15.0

Iron and steel

1.8

Textiles

-14.8

1.0

Electrical machinery and equipment

-7.2

0.8

Clothing

-6.9

Other services (public health,
education, residential)
Retail and wholesale trade and
warehousing

If we include the relative importance of the sectors – in terms of value added – for the
Japanese economy, the motor vehicles sector still clearly dominates, but also other
services and retail and wholesale trade matter a lot. The related decreases in output
matter most in electrical machinery and equipment and other machinery and equipment
due to their relative shares in value added.
Exports
Changes in the underlying production structure of the Japanese economy, following and
FTA with the EU, cause exports to change also, even more significantly. Exports of final
products as well as parts and components for motor vehicles increase by 96.6 percent,
while also exports of meats (+87.8 percent), vegetable oils (+11.9 percent), other
financial services (+5.5 percent) and other transport equipment (+3.4 percent) go up.
Exports for other machinery and equipment (-19.6 percent) and electrical machinery and
equipment (-10.4 percent) – in line with output changes for those sectors – are expected to
decrease. However, also textiles (-14.3 percent), paper, pulp and publishing (-6.8 percent)
and utilities (-6.4 percent) show a decrease in exports by 2020 compared to the economic
baseline.
Table 9.8

Most impacted sectors (% export change) for Japan, EU-Japan FTA, long run
Sector

Export

Sector

Export

(top 5 positive impact)

change (%)

(top 5 negative impact)

change (%)

Motor vehicles

96.6

Other machinery and equipment

-19.6

Meats, except beef

87.8

Textiles

-14.3

Vegetables oils

11.9

Electrical machinery and equipment

-10.4

Other financial services

5.5

Paper, pulp, and publishing

-6.8

Other transport equipment

3.4

Utilities

-6.4

Producer prices
For Japan, the FTA has a significant impact on producer prices at sector level. Clearly
prices for motor vehicles are expected to drop (by 12.0 percent)-mainly due to scale
economies, following the FTA, as are prices for meat (-2.2 percent), mainly due to
increased competition. The largest price increases occur in textiles (+4.0 percent),
clothing (+3.1 percent) and other machinery and equipment (+4.2 percent). These price

The impact of Free Trade Agreements in the OECD

77

changes are the consequence of specialisation of the Japanese economy into production of
(parts and components of) motor vehicles.
Like before in the EU-US FTA, we see that prices for services are expected to go up by
over 2 percent on average. This is due to the fact services have a higher income elasticity,
implying that an increase in income (which is indeed significant in Japan, looking at the
macroeconomic effects – especially in the long run) will increase demand for services
more than demand for goods. With relatively higher demand for services (including
service support for motor vehicles), given the production structure, prices for services are
expected to go up.

9.2.3

Sectoral impact on third countries: selection of most significant results
Whereas the Netherlands, EU26 and Japan are inside the scope of the potential EU-Japan
FTA, the other countries in the world are not. We provide a short analysis of output,
exports and producer price effects the FTA has for third countries as long as there are
significant effects.
Output
The main production effects of the EU-Japan FTA for the US lies in motor vehicles (an
output decline of 5.3 percent), while for Australia/NZ motor vehicles production drops by
32.0 percent, BRICs by 5.5 percent and ROW by 11.5 percent. Clearly an EU-Japan FTA
would make Japan the automotive centre – both for final trade and for parts and
components – of the world. The large EU-Japan market for automotives hurts the
competitiveness of the US sector, while strong US competitiveness in electrical
machinery and equipment is leading to increases in outputs because the Japanese
economy is specialising in motor vehicles, away from electrical machinery and
equipment. The electrical machinery and equipment sector will decline in Japan and
partially move to the EU +0.7 percent) as well as to the US (+3.2 percent), Australia/NZ
(+3.5 percent), BRICs (+0.7 percent – which is mostly final assembly of products), and
ROW (+2.9 percent). With respect to the meats sector, the FTA would significantly
strengthen the EU27 (EU26 and the Netherlands) meat sector, and divert Japanese
imports from other parts of the world towards the EU, at the expense of the US (-1.5
percent), Australia/NZ (-0.4 percent), BRICs (-14.0 percent) and ROW (-16.9 percent),
since the external EU and Japanese barriers remain.
Exports
The export picture looks similar to the changes in output. US exports of motor vehicles (6.6 percent) and meats (-13.3 percent) are dropping, while electrical machinery and
equipment (+4.5 percent) and clothing (+4.5 percent) see increases in exports due to the
EU-Japan FTA, reflecting the changes in production structure. Australia/NZ see a
significant drop in exports of parts and components and final motor vehicle products (29.7 percent) and of meat (-9.0 percent). Sectors in Australia/NZ that export more
following an EU-Japan FTA are other transport equipment (+6.2 percent), construction
(+4.6 percent), electrical machinery and equipment (+4.5 percent) and textiles (+4.1
percent). For the BRIC countries, the meat (-14.0 percent) and motor vehicle (-5.5
percent) sectors are expected to see drops in exports while other machinery and

78

The impact of Free Trade Agreements in the OECD

equipment (+1.5 percent) and construction (+1.1 percent) gain. Finally, in line with the
other blocks, ROW experiences a decrease in meat (-16.9 percent) and motor vehicle (11.5 percent) exports and increases in exports of other machinery and equipment,
electrical machinery and equipment (both due to the large demand for parts and
components from Japan), and construction.
Producer prices
Producer price effects of the EU-Japan FTA for the US are very limited. The only sector
with a price increase larger than 1 percent is the motor vehicles sector (1.2 percent).
For the US, BRICs and ROW, we find that the prices for services overall are going up a
little. For Australia/NZ, we find – on the other hand – that prices for services go down,
reflecting the trade diversion effect, showing the decreases in production faced by
Australian/NZ producers.

The impact of Free Trade Agreements in the OECD

79

10 Modelling results: Impact of an EUAustralia/New Zealand FTA

Summary of main results of an EU-Aus/NZ FTA:
•

The EU-Aus/NZ FTA is beneficial for the Netherlands, the EU26 and Aus/NZ in terms of national income,
in the short run but more so in the long run;

•

Dutch national income is expected to increase by € 214 million yearly in the long run, mostly attributable
to tariff reductions, but also to trade cost reductions;

•

Relative to national income, the largest gains in national income and trade flows are projected for Aus/NZ
(+ € 3.0 billion in the long run);

•

Exports and imports for the Netherlands and the EU26 increase very slightly; exports and imports for
Aus/NZ increase somewhat more (+ 4 percent);

•

No wage changes are expected in the Netherlands and EU26 as a result of an EU-Aus/NZ FTA; a slight
upward pressure on wages is observed for Aus/NZ, both for skilled (+0.2) and unskilled (+0.4) labour;

•

The macro-economic effects on third countries (US, Japan, BRICs, ROW) as a result of trade diversion
effects are negative but small;

•

The most pronounced sector-level effects in terms of output for the Netherlands if an EU-Aus/NZ FTA is
implemented occur in the iron and steel sector (+0.5 percent), communications (+0.4), the dairy products
sector (-2.4) and motor vehicles (-0.3). For the EU26 motor vehicles gains most (+0.6), while dairy
products decreases most (-2.1);

•

In absolute terms, the expected increase in the other business services sector contributes most to the
increase in total added value to the economy for the Netherlands and the EU26;

•

In Aus/NZ, the dairy sector increases considerably (+39 percent in the long run) reflecting shifts in relative
comparative advantage mostly as a result of cuts in the high baseline tariff rates. Electrical machinery and
equipment also grows considerably (+11.7). Decreases in output are expected for other machinery and
equipment, motor vehicles and clothing;

•

For Aus/NZ, export values are expected to increase in almost all sectors, except iron and steel and motor
vehicles, where respectively the Netherlands and the EU26 gain;

•

Effects on producer prices for the EU26 are negligible and for the Netherlands very small (a downward
tendency is observed, except for services). Aus/NZ sees a downward price effect across the economy.

In this Chapter, we present the expected impact of an ambitious EU-Aus/NZ FTA,
including deep tariff, barriers to services and non-tariff barrier cuts, with a time horizon
of 2020. The results are presented in two parts: macro-economic effects and sectorspecific effects.

The impact of Free Trade Agreements in the OECD

81

10.1 Macroeconomic effects
Table 10.1

EU – Australia/New Zealand FTA
NL

EU26

US

JP

AUS/NZ

BRICS

ROW

National income, million Euros

60

3,394

-294

-686

1,557

-452

-272

Value of exports, %

0.1

0.2

-0.1

-0.2

4.4

-0.1

-0.1

Value of imports, %

0.1

0.2

-0.1

-0.3

4.2

-0.1

-0.1

Real wages %, unskilled workers

0.0

0.0

0.0

-0.0

0.4

-0.0

-0.0

Real wages %, skilled workers

0.0

0.0

0.0

-0.0

0.2

-0.0

-0.0

National income, million Euros

214

7,481

-117

-1,352

2,961

-1,123

-1,563

Value of exports, %

0.2

0.3

-0.1

-0.2

4.6

-0.1

-0.1

Value of imports, %

0.2

0.3

-0.1

-0.3

4.3

-0.1

-0.1

Real wages %, unskilled workers

0.1

0.1

0.0

-0.0

0.7

-0.0

-0.0

Real wages %, skilled workers

0.1

0.1

0.0

-0.0

0.5

-0.0

-0.0

Short run

Long run

National income
Given the relatively limited trade flows between the two blocks, the expected impacts of
an EU- Australia/New Zealand (Aus/NZ) FTA are small when compared to the EU-US
FTA and EU-Japan FTA impacts, but still considerable. The direction of the macroeffects is similar to the EU-US FTA. As a result of this EU- Aus/NZ FTA, positive
effects in income and trade flows are observed for the two blocks involved, whereas the
third country effects are negative. This pattern is considerably more pronounced in the
long run than in the short run, with exception of the US where the (small) negative
national income effects are larger in the short run than in the long run.
Relative to national income in the baseline, the effects are largest for Aus/NZ; the
increase in national income as a result of this FTA is estimated to be € 3 billion in the
long run and € 1.6 in the short run. For the Netherlands, the impact in the short run is
positive but much smaller; national income is expected to increase by € 60 million. In the
long run, this effect is more pronounced, estimated at € 214 million. National income of
the EU26 is expected to increase by € 3.4 billion in the short run and € 7.5 billion in the
long run.
For the third countries, the negative effect on national income is a result of some small
trade diversion effects. The estimated change in national income in the long run is largest
for Japan (- € 1.4 billion). For the Rest of World it is - € 1.6 billion and for BRICS it is - €
1.1 billion. For the US the negative effect is relatively small, - € 118 million in the long
run.
Exports and imports
The observed pattern for this FTA also holds for the export and import values; a small
increase is observed for the parties to the FTA, whereas export and import values decline
slightly for the third countries to this agreement. For the Netherlands and the EU26,
import and export values increase by the same percentage, 0.1 and 0.2 percent
respectively in the short run, and 0.2 and 0.3 respectively in the long run. The results for
Aus/NZ show relatively larger increases in import and export values (+4.6 and +4.3,

82

The impact of Free Trade Agreements in the OECD

respectively, in the long run); exports increase slightly more than imports, implying a
small relative improvement of the trade balance. Again trade flow effects are slightly
more pronounced in the long run than in the short run, implying that capital mobility has
a positive effect on specialisation towards the most efficient sectors in this FTA.
For the third countries, i.e. the countries outside this FTA, very small (to negligible)
negative pressure on trade values is expected, for Japan around -0.2 and 0.3 for import
and export values, both in the short and long run.
Wage effects for skilled and unskilled workers
Given the relatively small effects on output and trade as a result of this FTA, the wage
effects are very small or negligible for most countries / blocs. Only for Aus/NZ, we do
observe an upward pressure on wages (up to 0.7 percent for unskilled labour in the long
run) as a result of the positive output and trade figures. This effect is stronger in the long
run than in the short run and unskilled labour stands to gain relatively more than skilled
labour. This latter effect can partly be attributed to increases in employment in the dairy
sector relatively intensive in unskilled labour. For the Netherlands and the EU26, the
tendency of wage pressure is upwards, but the extent negligible (+0.1 percent in the long
run for both skilled and unskilled labour). Similarly, a negative but negligible to very
small effect is observed for the third countries to this FTA.
Decomposition of national income effects
When looking at the decomposition of the observed effects on national income we see
clearly that for the Netherlands and the EU26, the estimated effects mainly stem from
tariff reductions, accounting for around two third of the estimated income increases in the
short and long run. For the Netherlands, services liberalisation under the FTA actually
leads to a negative effect on national income, which can mainly be explained by a loss of
relative preferences in intra-EU trade. For Aus/NZ on the contrary, services
liberalisations cause considerable positive national income effects, around two third of
total, whereas tariffs show positive effects in the long run, but negative effects at first in
the short run. Trade cost reductions are important for all parties involved, roughly
accounting for one third of the effects.
Table 10.2

Impact of the EU – Aus/NZ FTA on National income, million Euros
NL

EU26

Aus/NZ

SR

LR

SR

LR

Tariff

60.6

138.3

2,247.2

4,836.5

-142.1

383.8

Services

-36.4

-13.8

96.7

508.3

1,002.7

1,491.1

Trade costs

35.8

89.7

1,050.4

2,136.8

696.7

1,086.1

Total

60.0

214.2

3,394.3

7,481.6

1,557.3

2,961.1

The impact of Free Trade Agreements in the OECD

SR

LR

83

10.2 Sectoral effects
The sector-level effects of the EU-Aus/NZ FTA are discussed below; a detailed overview
of all sector-level results can be found in Annex D, containing sector-level effects on
output value, export value, producer prices and skilled and unskilled employment
changes.

10.2.1

Sectoral impact on the Netherlands and the EU26
Output
The macro-economic effects of this EU- Aus/NZ FTA for both the Netherlands and the
EU26 are positive but small. Following the macro-economic results, the shifts across
sectors as a result of this FTA are not so pronounced as for the other two FTAs simulated.
Table 10.3 gives the ten sectors for which the largest positive and negative percentage
changes in output are observed for the Netherlands in the long run. The iron and steel
sector is expected to grow mostly in percentage terms, as this sector has a relative
comparative advantage vis-à-vis the block Aus/NZ. Other sectors that are expected to
expand are communications (+0.3 percent), textiles and fabricated metals. Dairy products
is affected most negatively (-2.4 percent), as Aus/NZ can be seen as a serious competitor
to the Dutch dairy sector when the relatively high import barriers into the EU are cut.
Motor vehicles is also expected to contract somewhat as a result of this FTA.

Table 10.3

Most impacted sectors (% output change) for the Netherlands, EU-Aus/NZ FTA, long run
Sector

Output change (%)

(top 5 positive impact)

Sector

Output change (%)

(top 5 negative impact)

Iron and steel

0.5

Dairy products

-2.4

Communications

0.4

Motor vehicles

-0.3

Textiles

0.3

Electrical machinery and equipment

-0.1

Fabricated metals

0.3

Other goods

-0.1

Meats, except beef

0.2

Vegetables and fruits

-0.1

When relating the percentage changes to the sectoral shares in total value added to the
economy of the Netherlands, the increase in other business services contributes mostly to
the income increases for the Dutch economy in absolute terms, followed by
communications. The relatively largest decrease in added value for the Dutch economy in
absolute terms comes from the dairy products sector.
For the EU26, the sectors with most pronounced percentage output changes are reported
in Table 10.4. In contrast to the results for the Netherlands, the motor vehicles sector
shows an expansion in the EU as a whole (+0.6 percent). Other machinery and equipment
also gains. The expansion in the clothing sector is expected to be concentrated in the
lower labour cost countries (Eastern Europe), whereas the expansion in the textiles sector
applies to higher-en products in the field of technical textiles and fashion. Also for the
EU26, the dairy products sector is expected to decline (-2.1 percent) in the face of
stronger competition and cuts under this FTA in the relatively high tariff equivalents in

84

The impact of Free Trade Agreements in the OECD

the baseline for this sector. Output in electrical machinery and equipment is expected to
decline by -0.5 percent.
Table 10.4

Most impacted sectors (% output change) for the EU26, EU-Aus/NZ FTA, long run
Sector

Output

Sector

Output

(top 5 positive impact)

change (%)

(top 5 negative impact)

change (%)

Motor vehicles

0.6

Dairy products

-2.1

Clothing

0.4

Electrical machinery and equipment

-0.5

Textiles

0.3

Vegetables and fruits

-0.1

Other machinery and equipment

0.2

Other goods

-0.1

Iron and steel

0.2

Beverages and tobacco

-0.1

Looking at the impact on output in absolute terms, the other business services sector
contributes most to the output increases for the EU26, followed by the goods sectors
motor vehicles and other machinery and equipment. The retail sector shows small output
declines in the short run, but positive changes in the long run where capital is allowed to
move freely across sectors.
As with the EU-US FTA, we see the pattern that output in the motor vehicles sector at the
EU26 level is increasing, whereas the Netherlands sees negative changes. This is
explained by the expectation of relatively more fierce competition in the parts and
components sub-segment than in the final product sub-segment.
Exports
When looking at percentage changes in exports, the shifts across sectors are slightly
larger overall, though still small. For the Netherlands, the largest increases in exports are
seen in roughly the same sectors in which the output increases are observed (four out of
five). Communications sees the largest export value increase, whereas recreational and
consumer services also sees a considerable increase (+1.5 percent). In line with the results
for output, the largest percentage decreases in export are observed in the dairy sector (1.2 percent), followed by the motor vehicles sector (see Table 10.5).
Table 10.5

Most impacted sectors (% export change) for the Netherlands, EU-AUS/NZ FTA, long run
Sector

Export

Sector

Export

(top 5 positive impact)

change (%)

(top 5 negative impact)

change (%)

Communications

2.0

Dairy products

-1.2

services

1.5

Motor vehicles

-0.2

Clothing

1.3

Vegetables and fruits

-0.1

Recreational and consumer

Other services (public health,
Textiles

0.8

education, residential)

-0.1

Fabricated metals

0.7

Electrical machinery and equipment

-0.1

The impact of Free Trade Agreements in the OECD

85

Relating the observed export changes to the share that the sector makes up of the total
export value for the Netherlands, again the other business services sector contributes most
to overall export increases as a result of this FTA, followed closely by communications.
The goods sector chemicals, rubber, and plastics (increasing its export value by 0.2 in the
long run) also contributes considerably to the overall increase, given its large share in
overall export value for the Netherlands. Dairy products causes the relatively largest
decline in export value for the Netherlands overall, followed by motor vehicles.
When looking at the export values at sector level for the EU26 (Table 10.6), the list of
most pronounced changing sectors also matches the output figures to a large extent. Dairy
products (-1.2 percent) and electrical machinery and equipment (-0.5 percent) sees most
pronounced negative changes in export values, whereas clothing, motor vehicles, and
textiles (+1.5, +0.9 and +0.7 percent, respectively), are again among the most positively
impacted sectors. The sector communications is now also in the list for the EU26, with an
expected export value increase of 1 percent.
Table 10.6

Most impacted sectors (% exports change) for the EU26, EU-Aus/NZ FTA, long run
Sector

Export

Sector

Export

(top 5 positive impact)

change (%)

(top 5 negative impact)

change (%)

Clothing

1.5

Dairy products

-1.2

Communications

1.0

Electrical machinery and equipment

-0.5

Motor vehicles

0.9

education, residential)

-0.2

Textiles

0.7

Vegetables and fruits

-0.2

Fabricated metals

0.6

Construction

-0.1

Other services (public health,

When weighted with the relative importance of the sector in total export value of the
EU26, the export increase in motor vehicles contributes most to overall export increases
for the EU26 (roughly 9 percent of export increases for the EU26 can be attributed to this
sector), followed by the related sector of other machinery and equipment and – with some
distance – by chemicals, rubber and plastics. The largest services sector in terms of
overall contribution is other business services.
Producer prices
Given the relatively small effects of this EU- Aus/NZ FTA on the economies of the
Netherlands and the EU26, producer price changes are very small or negligible. The
estimated long run price changes at sector level are all within the range -0.1 and +0.1. For
the Netherlands the overall tendency is a slight downward pressure on producer prices for
most sectors – except for the services sectors – which can be attributed to a slight positive
specialisation effect increasing efficiency in the general equilibrium setting. For the EU26
the effect on prices in virtually zero; in some expanding sectors, there is a slight
downward pressure on prices, like in the motor vehicles sector. Also for the EU26, the
services sectors show a small upward (though mostly negligible) trend in prices, which
can be explained by the complementary nature to the manufacturing services and the high
elasticities for services.

86

The impact of Free Trade Agreements in the OECD

Sectoral impact comparison between the Netherlands and EU26
In general the differences between the results for the EU26 and the Netherlands are not
very large.
•
Both for the Netherlands and for the EU26, the sector-level effects are small,
generally within the range +0.5 and -0.5 percent output changes;
•
Many sector effects are similar for the Netherlands and EU26:
o
Positive output changes are observed mainly in textiles, fabricated metals
(slightly more for the Netherlands), clothing (slightly more for the EU26),
other machinery and equipment (slightly more for the EU26) and iron and
steel (slightly more for the Netherlands).
o
Negative effects are observed mainly in dairy products, but also in electrical
machinery & equipment (slightly more negative for EU26) and other goods.
•
In the sector motor vehicles output effects run in opposite directions (+0,6 for the
EU26 and -0,3 for the Netherlands in the long run), because the EU is considered to
have a relatively larger comparative advantage in final products than in parts and
components, while the Netherlands produces mainly parts and components, and not
final products. Slight opposite effects are also observed in the meats sector (positive
for the Netherlands and very slightly negative for the EU26);
•
In the communications services sector, output increases slightly more in the
Netherlands (+0.4) than in the EU26 (+0.1), pointing to a comparative advantage of
the Netherlands in this sector;
•
Similarities and differences in export patterns are similar to those in output patterns.

10.2.2

Sectoral impact on Australia/New Zealand
In line with the macro-economic results that are relatively more positive for Aus/NZ
under this FTA, the sector-level effects on output and exports are larger for Aus/NZ than
for the Netherlands and EU26.
Output
By far the most pronounced output increase at sector level for Aus/NZ occurs in the dairy
products sector (39 percent in the long run, see Table 10.7). This effect can be explained
by the high import barriers in the baseline when importing from Aus/NZ into the EU, in
combination with the highly competitive nature of this sector in Aus/NZ. The tariff cut
modelled will then have a large effect on the relative position of this sector between the
two trading blocks; considerable shifts are foreseen, benefitting Aus/NZ in terms of
higher export and output, but potentially benefitting the EU and the Netherlands in terms
of downward pressure on consumer prices.
The electrical machinery and equipment is also expected to expand considerably, by 11.7
percent. The sectors that are losing out in Aus/NZ as a result of trade liberalisation under
this FTA include other machinery and equipment (-9 percent), motor vehicles and
clothing. The top five declining sectors mirror the top five expanding sectors observed in
the EU results, reflecting trade specialisation between the two trading blocs.

The impact of Free Trade Agreements in the OECD

87

Table 10.7

Most impacted sectors (% output change) for AUS/NZ, EU-Aus/NZ FTA, long run
Sector

Output

(top 5 positive impact)

change (%)

Dairy products

Sector

Output

(top 5 negative impact)

Change (%)

39.2

Other machinery and equipment

-9.0

equipment

11.7

Motor vehicles

-6.9

Beverages and tobacco

2.1

Clothing

-6.4

Electrical machinery and

Other goods

2.1

Iron and steel

-4.6

Non-ferrous metals

1.6

Textiles

-3.8

When weighting these percentage changes by the share in value added to the economy of
that sector, the general sector other goods together with the dairy products sector make
the largest contribution to overall output increases as a result of this FTA. On the
contrary, other business services causes the largest negative change in output for the
economy as a whole, which is the mirror image of the results for the EU. This sector is
followed by other machinery and equipment.
Exports
Export values are expected to increase for Aus/NZ across the board; in fact there are only
two sectors with declining export values, iron and steel and motor vehicles. The other
sectors as modelled all see an increase in export value, except iron and steel and motor
vehicles (both -2.6 percent, see Table 10.8). Export increases are most pronounced – by
far – for dairy products, followed by meats. This can be explained by the cuts in the
relatively high import barriers into the EU as well as the global competitive position of
Aus/NZ in that sector. In the long run, export value increases for the Aus/NZ dairy
products sector even amount to 142 percent. The percentage increases in export value for
the other expanding sectors listed in Table 10.8 are also considerable.
Table 10.8

Most impacted sectors (%export change) for AUS/NZ, EU-Aus/NZ FTA, long run
Sector

Export

Sector

Export

(top 5 positive impact)

change (%)

(top 5 negative impact)

Change (%)

Dairy products

142.0

Iron and steel

-2.6

Meats, except beef

20.7

Motor vehicles

-2.6

Electrical machinery and
equipment

18.2

Clothing

15.1

Beverages and tobacco

11.3

The percentage changes are again weighted by the export shares of the sectors in the total
export portfolio of Aus/NZ. The large increase in the dairy products sector by far
contributes most to the absolute increase in export value. This sector is followed – at a
distance – by other goods that also make a large contribution. Substantial positive
contributions also come from the chemicals, rubber, and plastics sector, the beverages
and tobacco sector and the other business services sector. As mentioned, negative

88

The impact of Free Trade Agreements in the OECD

contributions are limited, the contraction in the motor vehicles sector being most
pronounced also in absolute terms.
Producer prices
In line with the larger output and especially export figures for Aus/NZ as a result of this
FTA, price effect for this bloc are slightly larger than the almost negligible effects for the
EU26 and the Netherlands. Overall, a downward price effect throughout the economy is
observed in Aus/NZ as a result of increased specialisation and improved cost-efficiency
as a result of trade liberalisation and expanding trade flows according to comparative
advantage. In the goods sectors, there are some examples of slight upward pressure on
prices in the contracting sectors iron and steel and motor vehicles. Also dairy prices show
a small increase, as Aus/NZ exporters can increase prices as a result of increased market
access. In the services sectors, there is also a small downward trend in producer prices
observed.

10.2.3

Sectoral impact on third countries: selection of most significant results
Output
Overall, the output effects at sector-level in the third countries, not party to this FTA, are
slightly negative, but very small or negligible. For the US, there are hardly any significant
changes in output at sector-level. This is in line with the negative but very small macroeconomic effects observed for the US. A slight output contraction of -0.1 percent is
expected in the electrical machinery and equipment sector, where Aus/NZ gains
considerably as a result of this FTA with the EU. The US motor vehicles sector is
expected to expand by 0.3 percent, benefiting slightly from the contraction in that sector
for Aus/NZ. Clothing will also increase somewhat. For the BRICs the sectoral output
changes are all very small, showing a very slight downward trend, most notably in textiles
and clothing, reflecting a trade diversion effect as a result of this FTA. For ROW, the
motor vehicles is also benefitting slightly (+0.2 percent), while the other machinery and
equipment sector contracts slightly (-0.3 percent). For Japan, the output changes are
slightly larger than for the other third countries, due to relatively closer linkages with the
Aus/NZ economy, but still small. Motor vehicles will decline slightly, just as the
Australian /New Zealand automotive sector, as the EU slightly strengthens its position. In
contrast, Japan will strengthen its output slightly in other transport equipment and other
machinery and equipment, i.e. in more intermediate products like parts and components.
Exports
The changes in export values for the third countries are slightly more pronounced than the
output changes, but for all third countries / blocs they are still very small or negligible,
Japan again showing relatively most changes. The most pronounced export changes are
observed in the sectors discussed above under output changes, which are the ones in
which changes in trade flows indeed result in sector output effects.
Producer prices
Changes in producer prices for the third countries / blocs as a result of this EU-Aus/NZ
FTA are very small or negligible. Overall, in line with the small negative macroeconomic third country effects due to trade diversion, a small downward pressure on

The impact of Free Trade Agreements in the OECD

89

prices across sectors is observed for the US, Japan, the BRICS and ROW. For Japan this
downward pressure is relatively largest, in line with the observation of Japan relatively
experiencing the largest negative third country effects (national income) following this
FTA.

90

The impact of Free Trade Agreements in the OECD

11 Synthesis and Conclusions

Chapters 8 to 10 analysed the impact of the different three FTAs. This chapter compares
and analyses the results of the three FTAs for the Netherlands and the EU and concludes.

11.1 Synthesis of findings: macro results
11.1.1

Macro results for the Netherlands and the EU
Table 11.1 below compares the results of the three FTAs for the Netherlands and the EU
at macro level.

Table 11.1

Impact of EU-US, EU-Japan and EU-Aus/NZ on the Netherlands and EU, macro effects
EU-US FTA

EU-Japan FTA

EU-Aus/NZ FTA

NL

EU26

NL

EU26

NL

EU26

National income, million Euros

246

15,261

176

Value of exports, %

1.1

1.4

0.7

-10,949

60

3,394

0.5

0.1

Value of imports, %

1.1

1.4

0.7

0.2

0.5

0.1

0.2

Real wages %, unskilled workers

0.2

0.3

Real wages %, skilled workers

0.2

0.3

0.1

-0.1

0.0

0.0

0.1

-0.0

0.0

0.0

1,375

34,927

458

-13,997

214

7,482

Value of exports, %

1.3

Value of imports, %

1.4

1.6

0.7

0.4

0.2

0.3

1.6

0.8

0.4

0.2

Real wages %, unskilled workers

0.3

0.5

0.5

0.1

-0.1

0.1

0.1

Real wages %, skilled workers

0.5

0.5

0.1

-0.1

0.1

0.1

Short Run (SR)

Long Run (LR)
National income, million Euros

National income
Table 11.1 shows that the largest gains as measured by the increase in national income
are foreseen from an EU-US FTA. This was to be expected, given the size of the US
economy and the fact that trade and investment flows with the US are much larger than
with Japan or Aus/NZ, the partner countries for the other two FTA analyses. The EU-US
FTA also shows the largest dynamic investment effects, with the long term national
income gain being more than 5 times larger in the long run than in the short run for the
Netherlands. Most striking are the results of the EU-Japan FTA, which show a loss in
national income in the EU26, while the Netherlands still gains. This loss in national
income is due to the effect of large tariff reductions, resulting in significant losses in tariff

The impact of Free Trade Agreements in the OECD

91

revenues, that are not compensated by the positive effects of services barriers and nontariff measure reductions. The losses in tariff revenues for the EU are not compensated
for by gains in producer surplus (market access to Japan increases, but NTMs remain to
some extent) or by gains in consumer surplus (lower prices for import products). In the
long run these negative effects are larger as the size of the tariff loss is larger due to larger
trade flows. The Netherlands still gains from an EU-Japan FTA, as a result of two main
reasons: 1) an increase in trade flows in the EU from which the Netherlands benefits
disproportionally, due to the Mainport of Rotterdam; and 2) increased market access for
meat and processed food products, which is relatively more important for the Netherlands
than for the EU26. Compared with the other two FTAs, the EU-Aus/NZ FTA results in
only very small national income gains in percentage terms (around 0.05 percent for the
Netherlands, and 0.08 for the EU).
Trade
The effect on trade flows is significant and positive for the participating partners in all
three FTAs (the trade creation effect clearly dominates the trade diversion effect inside
the FTAs), and again the largest effects originate from the EU-US FTA, followed by the
EU-Japan FTA and finally the EU-Aus/NZ FTA. There are no significant effects of the
FTAs on the trade balances of the Netherlands or the EU. However, the FTAs do not
affect Dutch and EU26 trade flows in the same way. The effect on trade flows from the
EU-US FTA and EU-Aus/NZ FTA are relatively smaller for the Netherlands compared to
the EU26, while for the EU-Japan FTA the impact on trade flows is relatively larger for
the Netherlands than for the EU26. These differences can mainly be explained by
differences in comparative advantages across sectors (processed foods, meat products and
automotives).
Wages
Real wages follow the same pattern as national income, resulting in the highest real wage
increases under the EU-US FTA. Developments in real wages are similar for unskilled
and skilled labour. The effects for the Netherlands and the EU26 are equal under all
FTAs, except for the EU-Japan FTA, where wages move in opposite directions even
though the changes are very small. The observed overall increase in wage levels due to
the FTAs are important because they indicate that at the aggregate level, workers move
from one sector to another because of the prospect of earning higher wages, not because
they are shed by the sector they have been working in previously. Only for the EU-Japan
FTA, the opposite is true for the EU26.

11.1.2

Macro results for FTA partner countries and third countries
The countries that are part of the FTA show an increase in national income in all three
FTAs. Third countries often loose out due to trade diversion effects. This is also reflected
in the Table below, which shows the impact on national income for the FTA partner
countries and countries outside the FTA. In some cases third countries may gain, for
example as a result of integrated regional supply chains. Only under the EU-Japan FTA
we see positive third country effects. It should be kept in mind that in reality more
countries could gain, but these gains would not always show up for individual countries
because of the country groupings selected.

92

The impact of Free Trade Agreements in the OECD

Table 11.2

Impact of EU-US FTA, EU-Japan FTA and EU-Aus/NZ FTA on national income of FTA partners and third
countries (millions of Euros)
EU-US FTA

EU-Japan FTA

EU-Aus/NZ FTA

SR

LR

SR

LR

SR

LR

US

17,959

24,062

-1,321

-3.,04

-294

-118

Japan

-930

-1,889

22,663

45,276

-687

-1,352

Australia/New Zealand

-84

-116

304

203

1,557

2,,61

(BRIC)

-1,307

-4,403

208

911

-452

-1,124

Rest of World (ROW)

-3,427

-8,807

-563

-7,516

-273

-1,564

Brazil, Russia, India, China

The EU-US FTA shows the largest negative third country effects because of the strong
trade creation effects inside the EU-US FTA and strong trade diversion effects outside the
FTA.28 In the long run, the loss in national income for third countries more than doubles,
as compared to the short run, although it should be noted that in percentage terms, the
effects are still relatively small.
The EU-Japan FTA has some positive effects on third countries: the BRICs and
Australia/New Zealand experience increases in national income. This is due to the strong
trade and FDI inter-linkages in the region, that spill the Japanese benefits over to the rest
of the region due to integrated international production networks. What is striking is that
in the long run, the positive national income effect for Australia/New Zealand decreases,
while for the BRICs it shows a more than four-fold increase. This implies that the
dynamic investment effect following the direct (short-run) gains for the Japanese – and
therefore the linked Asian economies – are much larger for the BRIC countries (mainly
China and to a lesser extent India) than for Aus/NZ. The US and Rest of World see
marginal decreases in national income as a result of this FTA.
The third country national income effects of the EU-Aus/NZ FTA are negative but
smaller in magnitude than for the other FTAs.

11.2 Synthesis of findings: sectoral results
The three FTAs have a different effect across sectors, depending on initial levels of
protection, and differences in comparative advantages between and within trading blocs.
Because different pull and push factors are at play in the three FTAs, there is no one clear
sectoral pattern across FTAs and the relative nature of comparative advantage is very
important. To illustrate this by an example: in the EU-US FTA, the EU26 sector of
electrical machinery and equipment loses output while the sector in the US increases
output. However, in the EU-Japan FTA the EU26 sector increases output while the
Japanese sector shrinks. In other words: relative to the US, taking into account other
sectors’ relative comparative advantages, the EU26 sector of electrical machinery and

28

Even though in the long run, the negative national income effect following the EU-US FTA for Rest of World is only slightly
larger than the negative national income effect following the EU-Japan FTA.

The impact of Free Trade Agreements in the OECD

93

equipment has a comparative disadvantage while compared to Japan that same sector has
a comparative advantage, relative to other comparative advantages in other sectors.

11.2.1

Sectoral results for the Netherlands and the EU
Table 11.2 presents the projected output changes in the long run for the Netherlands and
the EU as a result of these three FTAs. The cells which show an effect larger than +0.5
percent or smaller than -0.5 percent are in bold, to quickly identify the largest effects.

Table 11.3

Effect on output by sectors on the Netherlands and the EU of the three FTAs, long run
EU – US FTA

EU – Aus/NZ FTA

EU26

NL

EU26

NL

EU26

Chemicals, rubber, and plastics

0.2

0.2

-0.3

0.3

0.1

0.1

Other machinery and equipment

0.1

0.7

-0.3

0.7

0.1

0.2

Petro-chemicals

1.7

0.5

0.2

0.1

0.1

0.1

Electrical machinery and equipment

-0.1

-1.3

-3.4

0.7

-0.1

-0.5

Processed food, n.e.c.

-0.1

0.2

1.2

0.3

-0.0

-0.0

Iron and steel

5.6

0.2

-0.5

-0.8

0.5

0.2

Motor vehicles

-2.9

1.2

2.0

-8.3

-0.4

0.6

Crops, n.e.c. (except grains)

-1.3

-1.5

0.1

0.2

-0.0

-0.1

Vegetables and fruits

1.1

-0.1

-0.0

0.1

-0.1

-0.1

Fabricated metals

0.7

0.4

-0.3

-0.5

0.3

0.2

Beverages and tobacco

2.1

0.2

-0.4

0.4

-0.2

-0.1

Non-ferrous metals

0.1

-0.1

0.0

0.1

0.1

0.0

Vegetables oils

0.7

0.3

0.2

0.4

0.1

0.0

Paper, pulp, and publishing

0.4

0.2

-0.0

0.1

0.1

0.1

Textiles

1.1

1.1

-0.3

1.8

0.3

0.3

Dairy products

2.5

1.6

-8.1

0.6

-2.4

-2.1

Manufactures, n.e.c.

-0.6

0.6

-0.0

0.4

0.2

0.1

Meats, except beef

-2.4

-3.8

9.9

13.1

0.2

-0.0

Other transport equipment

-3.6

-3.1

-0.5

1.2

0.1

-0.1

Clothing

0.2

0.1

0.7

2.2

0.2

0.4

Oil, gas, and coal

0.0

0.0

0.0

0.0

0.0

0.0

Wood products

0.4

0.4

0.2

0.4

0.1

0.1

Other goods

0.3

0.2

0.4

0.6

-0.1

-0.1

Utilities

0.4

0.2

-0.0

-0.0

0.0

0.0

Construction

0.5

0.4

0.2

-0.0

0.1

0.1

Retail/wholesale trade & warehousing

0.2

0.3

0.1

0.0

-0.0

0.0

Transport services

0.7

0.3

0.5

0.3

0.0

0.0

Communications

0.3

0.1

0.1

0.1

0.4

0.1

Other financial services

0.4

0.5

0.1

0.1

0.1

0.1

Insurance

0.3

1.7

0.1

0.1

0.0

0.0

Other business services

0.4

0.1

0.1

-0.1

0.1

0.1

Recreational and consumer services

0.4

0.1

0.1

0.0

0.2

0.1

Other services (public health,

0.1

0.1

0.1

-0.1

0.0

0.0

education, residential)

94

EU – Japan FTA

NL

The impact of Free Trade Agreements in the OECD

This shows that, in line with changes in national income, the sectoral output effects are
generally larger for the EU-US FTA, and relatively small for the EU-Aus/NZ FTA. In the
Netherlands, 15 sectors are affected significantly29 as a result of the EU-US FTA, while
this is true for 9 sectors under the EU-Japan FTA and only 2 sectors under the EUAus/NZ FTA. If we analyse the results across the FTAs for the Netherlands, a number of
sectors show most significant results across FTAs in terms of output in the long run:
•
The iron and steel sector experiences a large output increase under the EU-US FTA
(+5.6 percent), a smaller increase under the EU-Aus/NZ FTA (+0.5 percent), but a
decline under the EU-Japan FTA (-0.5 percent);
•
The motor vehicles sector contracts under the EU-US and EU-Aus/NZ FTAs (-2.9
percent and -0.4 percent respectively), while its output increases under the EU-Japan
FTA (+2.0 percent);
•
The dairy sector shows large effects in all three FTAs, with an expansion under the
EU-US FTA, but a large contraction under the EU-Japan and EU-Aus/NZ FTAs (-8.1
and -2.4 percent respectively);
•
For meats (except beef), the EU-Japan has most profound effect, with an output
increase of 9.9 percent. The effect of an EU-Aus/NZ FTA on the sector is very
marginal (+0.2 percent), and of the EU-US FTA even significantly negative (-2.4
percent);
•
Other transport equipment experiences an output decline under the EU-US and EUJapan FTAs (-3.6 percent and -0.5 percent respectively), and a marginal increase
under the EU-Aus/NZ FTA (+0.1 percent).
It also worth mentioning that there is significant output expansion under the EU-US FTA
for the sectors petro-chemicals (+1.7 percent), vegetables and fruits (+1.1 percent),
beverages and tobacco (+2.1 percent), and textiles (+1.1 percent). In contrast, the sectors
other crops (-1.3 percent) and other manufactures (-0.6 percent) show a significant
contraction as a result of this FTA. Under the EU-Japan FTA other sectors with
significant output effects are electrical machinery and equipment (-3.4 percent),
processed foods (+1.2 percent) and clothing (+0.7 percent).
It should be noted that the above focuses on relative increases in output. If we take the
value added of different sectors into account and hence look at changes in absolute
changes, the picture changes somewhat, and especially some of the services sector show a
large increase in absolute terms, notably the other business services sector. When looking
at the results of the services sectors, it is also important to keep in mind that the model
only includes the cross-border modes of services trade. FDI in services is thus not
included, and therefore we expect the gains from the FTA to be underestimated by the
model.
11.2.2

Sectoral results for the FTA partners and third countries
For third countries, also significant sectoral effects occur following the FTAs. The sectors
most affected are motor vehicles, electrical machinery and equipment, and other
machinery and equipment. Other sectors that report relatively large effects are other
transport equipment, clothing, textiles and the meats sector. Below we summarise the
29

Defined here as a contraction or expansion of the output by more than 0.5 percent.

The impact of Free Trade Agreements in the OECD

95

main effects on output by sector for the FTA partners and third countries as a result of
each FTA in the long run:
United States
•
EU-US FTA: the largest output gains are in clothing (+16.7 percent), electrical
machinery and equipment (+6.3 percent), meat (+4.0 percent), crops (+3.4 percent)
and other transport equipment (+3.3 percent), while the sectors dairy products (-3.6
percent), insurance services (-1.4 percent) and other machinery and equipment (-1.1
percent) contract;
•
EU-Japan FTA: Some sectors are significantly affected in the US as a result of this
FTA. Output increase in percentage terms are largest in clothing (+4.2 percent),
electrical machinery and equipment (+3.2 percent), followed at some distance by
other machinery and equipment (+0.9 percent), other transport equipment (+0.8
percent) and other manufactures (+0.7 percent). Motor vehicles show the largest
contraction (-5.5 percent), followed by meats (-1.6 percent);
•
EU- Aus/NZ FTA: in line with the limited macro economic results, this FTA has
limited effects on sectoral output as well, with the impact for most sectors being 0.0
percent. The largest increase takes place in the motor vehicles section (+0.3 percent),
while the largest decrease is recorded in the electrical machinery and equipment
sector (-0.2 percent).
Japan
EU-US FTA: For many sectors the effects are small but positive. The largest
percentage gains are expected for other machinery and equipment (+0.5 percent) and
electrical machinery and equipment (+0.5 percent). These overall small but positive
gains are in contrast to the motor vehicles sectors, which is expected to decrease by
2.2 percent;
•
EU-Japan FTA: this has profound effects on Japan’s sectoral composition. The effect
is dominated by the large increase of output in the motor vehicles sector, by 53.4
percent. Due to the fact that this sector draws in resources from other sectors in the
Japanese economy, most other sectors show a decline, especially the meats sector (84.5 percent), other machinery and equipment (-15.0 percent) and textiles (-14.8
percent). Other sectors that show a significant growth (although small when
compared to motor vehicles) are construction (+1.4 percent) and iron and steel (+1.2
percent);
•
EU-Aus/NZ FTA: this FTA has an impact on several sectors in Japan. The motor
vehicles sector contracts (-1.9 percent), but most other sectors show no or small
positive effects, with the largest positive effects in the sectors other machinery and
equipment (+0.6 percent), textiles (+0.5 percent), electrical machinery and equipment
(+0.4 percent) and transport equipment (+0.4 percent).
•

Australia/New Zealand:
•
EU-US FTA: the largest positive impact in percentage terms in expected in the motor
vehicles sector (+1.4 percent), with smaller positive effects in the iron and steel
sector (+0.3 percent). The largest decrease is in the textile sector (-0.5 percent), crops
except grains (-0.4 percent) and clothing (-0.3 percent);
•
EU-Japan FTA: this has a more profound effect on the sectoral output of
Australia/New Zealand. A number of sectors show an expansion of output: electrical

96

The impact of Free Trade Agreements in the OECD

•

machinery and equipment (+3.5 percent), other transport equipment (+3.2 percent),
textiles (+3.0 percent), other machinery and equipment (+2.9 percent) and clothing
(+2.4 percent). The sector showing the most significant decrease in relative terms in
motor vehicles (-32.1 percent), followed at a large distance by iron and steel (-4.8
percent);
EU-Aus/NZ FTA: the dairy sector increases considerably (+38.7 percent in the long
run). Electrical machinery and equipment also grows considerably (+11.7). Decreases
in output are expected for other machinery and equipment (-9.0 percent), motor
vehicles (-6.9 percent) and clothing (-6.4 percent).

BRIC:
EU-US FTA: this FTA causes limited sectoral shifts, with most sectors reporting an
impact in the range of -0.1 and 0.1 percent. Electrical machinery and equipment sees
the largest decrease in output (-0.7 percent), followed by clothing (-0.2 percent) and
wood products (-0.2 percent);
•
EU-Japan FTA: this FTA has a more significant impact on the sectoral output of the
BRICs. Motor vehicles and meat show the largest decrease (-2.9 percent and -1.6
percent respectively), followed by clothing and transport equipment (both -0.4
percent). The largest gains are reported for other machinery and equipment (+0.8
percent);
•
EU-Aus/NZ FTA: Again most sectors record a change of output in the range of -0.1
and 0.1 percent, the only exception being clothing, with -0.2 percent.
•

ROW
•
EU-US FTA: the sectors experiencing the largest losses are motor vehicles (-1.3
percent), other transport equipment (-0.9 percent), and electrical machinery and
equipment (-0.7 percent). Small gains are reported for wood products (+0.3 percent),
paper, pulp and publishing (+0.2 percent) and meat (+0.2 percent);
•
EU-Japan FTA: the impact of this FTA on sectoral output is relatively large, looking
at the number of sectors with significant effects and the size of these effects in
percentage terms. There are four sectors with a large increase in output: other
machinery and equipment (+3.6 percent), electrical machinery and equipment (+2.3
percent), iron and steel (+0.6 percent), and non-ferrous metals (+0.5 percent). The
largest contraction takes place in motor vehicles (-10.9 percent), other transport
equipment (-3.2 percent) and meat (-1.5 percent);
•
EU-Aus/NZ FTA: this FTA has the smallest effect on ROW sectoral output. No
sectors report changes larger than 0.5 percent, positive or negative. Other machinery
and equipment shows the largest decrease (-0.3 percent), while the largest output
increase is in motor vehicles (+0.2 percent).

11.3 Conclusions
The study shows national income gains for the Netherlands of all three FTAs, with the
largest impact stemming from the EU-US FTA. For the EU26, the EU-US FTA and EUAus/NZ FTA also show positive national income effects. However, in contrast, the EUJapan FTA has a negative income effect for the EU-26. For both the EU-Japan and EU-

The impact of Free Trade Agreements in the OECD

97

Aus/NZ FTA, tariff reductions dominate the national welfare effects, while for the EUUS FTA, reductions in non tariff measures are more important.
It should be kept in mind that the baseline does not include the assumption of a successful
completion of the Doha Development Round (DDA). In case this assumption would be
included in the baseline, the results would change significantly, especially for the EUJapan FTA, as this would reduce existing tariff barriers significantly, making services
barriers and non-tariff measures relatively much more important for these FTAs and
tariffs relatively much less important, than they are now.

98

The impact of Free Trade Agreements in the OECD

Annex

Annex A

Terms of Trade effects

Table 0.1 Terms of trade effects
short-run effects

long-run effects

EU-USA FTA

EU-JAPAN FTA

EU-AUS/NZ FTA

EU-USA FTA

EU-JAPAN FTA

EU-AUS/NZ FTA

Netherlands

-0.2

-0.1

0.0

-0.2

-0.1

EU26

0.0

0.0

0.0

0.0

0.0

0.0
0.0

United States

0.1

0.1

-0.0

0.1

0.1

-0.0

Japan

0.0

-1.0

0.0

0.0

-1.1

0.0

Australia, NZ

-0.1

0.5

0.0

-0.1

0.5

-0.0

BRICs

-0.0

0.0

-0.0

-0.0

0.0

-0.0

ROW

-0.0

0.1

0.0

-0.0

0.1

0.0

The impact of Free Trade Agreements in the OECD

99

Annex B

Impact of an EU-US FTA

Table 0.2 Output effects of EU-US FTA on all Industries, % change
NL
sectors

EU26
LR

SR

US

LR

SR

JP

LR

AUS/NZ

SR

LR

SR

BRIC

LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

0.0

0.2

0.0

0.2

0.0

0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.2

2

Other machinery and equipment

-0.5

0.1

0.4

0.7

-1.3

-1.1

0.5

0.5

0.0

0.1

0.0

0.0

0.0

-0.2

3

Petro-chemicals

1.6

1.7

0.4

0.5

-0.3

-0.2

0.0

0.0

0.0

0.0

0.0

-0.1

0.0

-0.1

4

Electrical machinery and equipment

-2.1

-0.1

-2.4

-1.3

4.8

6.3

0.4

0.5

-0.5

0.0

-0.3

-0.7

-0.6

-0.7

5

Processed foods, n.e.c.

-0.3

-0.1

0.0

0.2

0.2

0.2

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

6

Iron and steel

4.2

5.6

-0.1

0.2

-1.1

-0.8

-0.1

-0.1

0.2

0.3

0.1

0.0

0.1

-0.1

7

Motor vehicles

-4.0

-2.9

0.9

1.2

0.9

1.2

-2.0

-2.2

1.2

1.4

0.2

0.1

-1.0

-1.3

8

Crops, n.e.c. (except grains)

-1.3

-1.3

-1.5

-1.5

3.3

3.4

0.1

0.0

-0.4

-0.4

-0.2

-0.1

-0.2

-0.2

9

Vegetables and fruits

1.2

1.1

-0.1

-0.1

-0.2

-0.3

0.0

0.0

0.0

-0.1

0.0

0.0

0.0

0.0

10

Fabricated metals

0.3

0.7

0.1

0.4

-0.4

-0.2

0.1

0.1

0.0

0.0

0.1

0.1

0.2

0.1

11

Beverages and tobacco

1.7

2.1

0.1

0.2

-0.1

0.0

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

-0.1

12

Non-ferrous metals

-0.2

0.2

-0.4

-0.1

0.4

0.6

0.0

0.0

-0.2

-0.2

0.0

0.0

0.0

0.0

13

Vegetables oils

0.5

0.7

0.1

0.3

-0.6

-0.6

0.0

0.0

0.0

0.0

0.0

0.1

0.0

0.0

14

Paper, pulp, and publishing

0.2

0.4

-0.1

0.2

-0.2

-0.1

0.1

0.1

0.0

0.0

0.1

0.0

0.2

0.2

15

Textiles

0.7

1.1

0.8

1.1

0.0

0.1

0.4

0.3

-0.4

-0.5

-0.2

-0.1

-0.2

-0.4

16

Dairy products

2.2

2.5

1.5

1.6

-3.7

-3.6

0.1

0.0

-0.2

-0.2

0.0

0.0

0.0

0.0

17

Manufactures, n.e.c.

-0.6

-0.6

0.3

0.6

0.2

0.1

0.1

0.0

-0.1

-0.1

-0.1

-0.1

-0.1

-0.2

18

Meats, except beef

-2.6

-2.4

-3.9

-3.8

4.0

4.0

0.2

0.2

-0.1

-0.1

0.1

0.1

0.2

0.2

19

Other transport equipment

-4.1

-3.6

-3.5

-3.1

3.2

3.3

-0.2

-0.1

0.2

0.2

0.1

0.1

-0.7

-0.9

20

Clothing

-0.2

0.2

-0.2

0.1

17.5

16.7

0.2

0.1

-0.2

-0.3

-0.4

-0.3

-0.1

-0.3

21

Oil, gas, and coal

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

100

SR

NL
sectors

SR

EU26
LR

SR

US

LR

SR

JP

LR

SR

AUS/NZ
LR

SR

BRIC

LR

SR

ROW

LR

SR

LR

22

Wood products

0.1

0.4

0.1

0.4

-0.5

-0.3

0.2

0.2

0.0

0.0

0.2

0.2

0.3

0.3

23

Other goods

0.1

0.3

0.1

0.2

-0.7

-0.6

0.1

0.0

-0.1

-0.1

0.1

0.1

0.1

0.0

24

Utilities

0.1

0.4

0.0

0.2

0.1

0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

-0.1

25

Construction

0.0

0.5

0.0

0.4

0.1

0.3

0.0

0.0

0.0

0.0

0.0

-0.1

0.0

-0.1

26

Retail and wholesale trade and warehousing

-0.1

0.2

0.0

0.3

0.1

0.2

0.0

0.0

0.0

0.0

0.0

-0.1

0.0

-0.1

27

Transport services

0.6

0.7

0.1

0.3

0.0

0.1

0.2

0.1

0.0

0.0

0.1

0.0

0.2

0.2

28

Communications

0.0

0.3

-0.1

0.1

0.1

0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.1

0.0

29

Other financial services

0.1

0.4

0.3

0.5

-0.2

-0.1

0.0

0.0

0.0

0.0

0.0

-0.1

0.0

0.0

30

Insurance

0.1

0.3

1.6

1.7

-1.5

-1.4

0.0

0.0

0.0

0.0

0.1

0.1

0.1

0.0

31

Other business services

0.1

0.4

-0.1

0.1

0.1

0.2

0.1

0.0

0.0

0.0

0.1

0.0

0.1

0.1

32

Recreational and consumer services

0.0

0.4

-0.1

0.1

0.2

0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.1

0.0

33

Other services (public health, education, residential)

0.0

0.1

0.0

0.1

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

-0.1

Table 0.3 Export Effects of an EU-US FTA on all Industries, % change
NL
sectors

SR
1.4

EU26
LR
1.6

SR
1.3

US

LR
1.5

SR
7.5

JP

LR
7.6

AUS/NZ
SR

BRIC

LR

SR

ROW

SR

LR

LR

SR

-0.3

-0.3

-0.6

-0.6

-0.5

-0.5

-0.5

LR
-0.5
-0.4

1

Chemicals, rubber, and plastics

2

Other machinery and equipment

1.0

1.7

2.1

2.4

4.4

4.6

0.6

0.6

-0.4

-0.3

-0.1

-0.1

-0.2

3

Petro-chemicals

2.9

3.1

2.6

2.7

3.0

3.1

-0.2

-0.2

-0.1

-0.1

-0.2

-0.1

-0.2

-0.2

4

Electrical machinery and equipment

-2.0

-0.1

-1.9

-0.8

9.5

11.1

0.6

0.7

-0.8

-0.4

-0.6

-1.1

-0.7

-0.7

5

Processed foods, n.e.c.

1.0

1.2

1.3

1.4

9.4

9.4

0.1

0.0

-0.2

-0.3

-0.1

0.0

0.0

-0.1

6

Iron and steel

4.8

6.1

0.2

0.5

-0.4

-0.2

-0.1

0.0

-0.1

0.1

0.1

0.2

0.2

0.0

7

Motor vehicles

-4.4

-3.3

2.1

2.5

8.3

8.6

-3.7

-4.1

1.1

1.2

0.2

0.2

-1.8

-2.1

8

Crops, n.e.c. (except grains)

2.7

2.6

7.5

7.3

53.7

53.9

-1.3

-1.3

-1.3

-1.3

-1.3

-1.2

-1.5

-1.4

The impact of Free Trade Agreements in the OECD

101

NL
sectors
9

Vegetables and fruits

0.9

EU26
LR
0.9

SR
-0.1

US

LR
-0.1

SR
0.6

JP

LR
0.5

SR

AUS/NZ
LR

0.0

SR

-0.1

BRIC

LR

-0.2

-0.2

SR
-0.1

ROW

LR
-0.1

SR
-0.1

LR
-0.1

10

Fabricated metals

1.6

1.9

1.9

2.1

5.8

5.7

0.5

0.6

-0.1

0.1

0.4

0.6

0.4

0.5

11

Beverages and tobacco

2.3

2.7

0.9

1.0

7.0

7.0

-0.1

-0.1

-0.3

-0.4

-0.1

-0.2

-0.2

-0.2

12

Non-ferrous metals

0.0

0.3

0.6

0.9

7.5

7.5

0.1

0.1

-0.4

-0.4

-0.2

-0.1

-0.1

-0.1

13

Vegetables oils

0.8

0.9

1.5

1.6

2.3

2.2

-0.6

-0.5

-0.3

-0.3

0.0

0.1

-0.1

-0.1

14

Paper, pulp, and publishing

0.8

0.9

0.3

0.5

1.0

1.0

0.4

0.4

0.0

0.0

0.5

0.5

0.4

0.5

15

Textiles

2.6

3.1

2.7

3.0

6.2

6.2

0.4

0.3

-0.8

-0.8

-0.4

-0.2

-0.4

-0.6

16

Dairy products

6.3

6.5

11.4

11.5

45.2

45.3

*

*

-0.6

-0.6

-0.5

-0.5

-0.4

-0.4

17

Manufactures, n.e.c.

0.5

0.2

4.1

4.5

9.5

9.3

0.0

0.0

-0.6

-0.6

-0.5

-0.4

-0.6

-0.7

18

Meats, except beef

-2.7

-2.5

-2.9

-2.8

35.8

35.5

-1.8

-1.8

-1.4

-1.4

-0.4

-0.3

0.0

0.0

19

Other transport equipment

-3.2

-2.7

-1.7

-1.3

12.5

12.5

-0.6

-0.4

-0.8

-0.6

-0.4

-0.3

-1.5

-1.5

20

Clothing

0.5

0.9

1.0

1.3

32.3

31.4

0.5

0.4

-0.4

-0.4

-0.7

-0.6

0.1

-0.2

21

Oil, gas, and coal

-0.3

-0.2

3.7

3.7

5.3

5.3

*

*

-0.1

0.0

0.1

0.4

-0.1

0.0

22

Wood products

0.9

1.1

1.0

1.2

2.5

2.4

0.4

0.5

-0.1

-0.1

0.4

0.7

0.4

0.6

23

Other goods

0.8

0.9

1.3

1.3

1.4

1.3

0.1

0.0

-0.1

-0.2

-0.1

-0.1

-0.1

-0.1

24

Utilities

0.3

0.6

-0.3

-0.1

-1.0

-0.8

0.4

0.4

0.1

0.1

0.5

0.4

0.3

0.3

25

Construction

0.3

0.4

-0.1

0.0

1.1

1.0

0.3

0.4

-0.2

-0.2

0.2

0.4

0.2

0.3

26

Retail and wholesale trade and warehousing

0.2

0.3

0.0

0.1

1.5

1.5

0.4

0.5

0.1

0.1

0.4

0.5

0.3

0.3

27

Transport services

0.8

0.9

0.6

0.7

1.3

1.3

0.7

0.7

0.2

0.3

0.5

0.6

0.5

0.6

28

Communications

0.4

0.6

0.3

0.4

7.1

7.3

0.4

0.4

0.1

0.1

0.5

0.5

0.5

0.5

29

Other financial services

2.5

2.5

5.8

5.9

10.1

10.1

0.5

0.7

0.1

0.2

0.3

0.5

0.4

0.5

30

Insurance

1.6

1.7

7.5

7.6

2.8

2.7

-0.1

0.0

-0.6

-0.5

-0.1

0.0

-0.4

-0.3

31

Other business services

0.8

0.9

0.5

0.7

7.6

7.4

0.6

0.6

0.1

0.2

0.4

0.5

0.4

0.4

32

Recreational and consumer services

0.4

0.6

0.0

0.1

1.7

1.7

0.4

0.3

0.1

0.1

0.3

0.4

0.3

0.4

33

Other services (public health, education, residential)

0.3

0.2

-0.3

-0.4

-0.9

-0.9

0.6

0.6

0.1

0.2

0.5

0.6

0.5

0.6

The impact of Free Trade Agreements in the OECD

102

SR

Table 0.4 Producer Price Effects of an EU-US FTA on all Industries, % change
NL

EU26
SR

US

LR

SR

JP

LR

AUS/NZ
SR

BRIC

LR

SR

ROW

sectors

SR

LR

SR

LR

LR

SR

1

Chemicals, rubber, and plastics

-0.2

-0.2

0.0

0.0

0.0

0.0

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

LR

2

Other machinery and equipment

0.0

-0.1

0.0

0.0

0.3

0.3

-0.2

-0.2

0.0

0.0

-0.1

-0.1

-0.1

3

Petro-chemicals

-0.2

-0.2

-0.1

0.0

0.0

-0.1

-0.1

-0.1

0.0

-0.1

0.0

-0.1

0.0

-0.1

0.0

4

Electrical machinery and equipment

0.2

0.0

0.3

0.2

-0.5

-0.7

-0.2

-0.2

0.0

0.0

0.0

0.1

0.0

0.0

5

Processed foods, n.e.c.

-0.1

-0.2

0.0

0.0

0.1

0.1

-0.1

-0.1

6

Iron and steel

-0.9

-1.2

0.1

0.0

0.3

0.3

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

7

Motor vehicles

0.8

0.6

-0.2

-0.3

-0.1

-0.2

0.4

0.5

-0.3

0.0

-0.3

-0.1

-0.1

0.2

0.3

8

Crops, n.e.c. (except grains)

-1.0

-0.9

-0.5

-0.5

1.6

1.7

-0.1

-0.1

-0.2

-0.2

-0.2

-0.2

-0.2

-0.2

9

Vegetables and fruits

-0.5

-0.5

-0.2

-0.1

0.4

0.4

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

10

Fabricated metals

-0.1

-0.1

0.1

0.1

0.2

0.2

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

11

Beverages and tobacco

-1.6

-1.9

-0.1

-0.2

0.2

0.2

-0.1

-0.1

0.0

0.1

-0.1

-0.1

-0.1

0.0

12

Non-ferrous metals

-0.1

0.0

0.0

0.0

0.1

0.1

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

13

Vegetables oils

-0.1

-0.1

0.0

0.1

0.1

0.1

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

14

Paper, pulp, and publishing

0.0

0.0

0.1

0.1

0.2

0.2

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

-0.1

15

Textiles

-0.2

-0.3

-0.1

-0.1

0.1

0.1

-0.2

-0.2

0.0

0.0

-0.1

-0.1

-0.1

0.0

16

Dairy products

-0.1

-0.1

0.1

0.1

-0.2

-0.2

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

17

Manufactures, n.e.c.

0.0

0.1

0.0

0.0

0.1

0.2

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

0.0

18

Meats, except beef

-0.2

-0.2

0.0

0.0

0.3

0.3

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

19

Other transport equipment

0.4

0.4

0.4

0.4

-0.2

-0.1

-0.1

-0.1

0.0

0.0

-0.1

-0.1

0.0

0.1

20

Clothing

0.0

0.0

0.1

0.1

-2.0

-1.9

-0.2

-0.1

0.0

0.0

0.0

0.0

-0.1

0.0

21

Oil, gas, and coal

0.0

0.1

0.1

0.2

-0.1

0.0

-0.1

0.0

-0.1

0.0

-0.1

0.0

-0.1

0.0

22

Wood products

0.0

0.0

0.1

0.1

0.1

0.2

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

23

Other goods

-0.2

-0.1

0.0

0.1

0.1

0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

The impact of Free Trade Agreements in the OECD

103

NL
sectors

SR

EU26
LR
-0.1

SR

US

LR

0.1

0.1

SR

JP

LR

0.2

0.1

AUS/NZ

SR

LR

-0.1

-0.1

SR

BRIC

LR
0.0

0.0

SR

ROW

LR

-0.1

-0.1

SR

LR

24

Utilities

0.0

-0.1

-0.1

25

Construction

-0.1

0.0

0.1

0.1

0.2

0.3

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

26

Retail and wholesale trade and warehousing

0.0

0.0

0.1

0.1

0.3

0.3

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

27

Transport services

-0.1

-0.1

0.1

0.1

0.1

0.1

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

28

Communications

0.1

0.0

0.2

0.2

0.3

0.2

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

29

Other financial services

0.0

0.1

0.1

0.2

0.2

0.3

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

30

Insurance

0.1

0.1

0.2

0.2

0.1

0.2

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

31

Other business services

0.1

0.0

0.2

0.1

0.3

0.3

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

32

Recreational and consumer services

0.0

0.0

0.1

0.1

0.2

0.2

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

33

Other services (public health, education, residential)

0.0

0.1

0.2

0.3

0.3

0.3

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

Table 0.5 Skilled labour employment, % change
NL
sectors

EU26
LR

SR

US

LR

SR

JP

LR

SR

AUS/NZ
LR

SR

BRIC

LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

0.0

-0.1

-0.1

-0.1

0.1

0.1

0.0

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

2

Other machinery and equipment

-0.5

-0.2

0.4

0.5

-1.2

-1.1

0.5

0.5

0.0

0.1

0.0

0.0

0.1

-0.1

3

Petro-chemicals

1.4

1.1

0.3

0.1

-0.2

-0.3

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

4

Electrical machinery and equipment

-2.1

-0.4

-2.2

-1.4

4.3

5.6

0.4

0.5

-0.5

-0.1

-0.2

-0.5

-0.5

-0.6

5

Processed foods, n.e.c.

-0.3

-0.3

0.0

-0.1

0.2

0.1

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

6

Iron and steel

3.9

5.0

-0.1

0.0

-1.0

-0.8

-0.1

-0.1

0.1

0.2

0.0

0.1

0.1

0.0

7

Motor vehicles

-3.8

-3.0

0.8

1.0

0.9

1.1

-1.9

-2.0

1.1

1.3

0.1

0.1

-0.9

-1.1

8

Crops, n.e.c. (except grains)

-1.6

-1.7

-1.8

-1.8

3.9

3.9

0.1

0.1

-0.5

-0.4

-0.2

-0.1

-0.3

-0.2

9

Vegetables and fruits

1.1

0.9

-0.2

-0.3

-0.2

-0.3

0.1

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

10

Fabricated metals

0.3

0.5

0.1

0.2

-0.3

-0.2

0.1

0.1

0.0

0.0

0.1

0.1

0.1

0.1

The impact of Free Trade Agreements in the OECD

104

SR

NL
sectors

SR

EU26
LR

SR

US

LR

SR
0.0

JP

LR
-0.2

SR
0.0

AUS/NZ
LR

SR

BRIC

LR

SR
0.0

ROW

LR
0.0

SR
0.0

LR

11

Beverages and tobacco

1.6

1.5

0.1

-0.1

0.0

-0.1

-0.1

0.0

12

Non-ferrous metals

-0.2

-0.1

-0.4

-0.3

0.4

0.5

13

Vegetables oils

0.5

0.4

0.1

0.1

-0.6

-0.7

0.0

0.0

-0.2

-0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.1

0.0

0.0

14

Paper, pulp, and publishing

0.2

0.1

-0.1

-0.1

-0.2

-0.2

0.1

0.1

0.0

0.0

0.1

0.1

0.2

0.2

15

Textiles

0.6

0.7

0.7

0.8

0.9

0.8

0.5

0.4

-0.4

-0.4

-0.2

-0.1

-0.3

-0.4

16

Dairy products

2.2

2.1

1.4

1.4

-3.6

-3.7

0.1

0.1

-0.2

-0.2

0.0

0.0

0.0

0.0

17

Manufactures, n.e.c.

-0.6

-0.8

0.2

0.3

0.3

0.3

0.1

0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.2

18

Meats, except beef

-2.2

-2.3

-3.4

-3.5

3.7

3.6

0.2

0.2

-0.1

-0.1

0.1

0.1

0.2

0.2

19

Other transport equipment

-3.8

-3.5

-3.3

-3.1

3.1

3.1

-0.2

-0.1

0.1

0.2

0.1

0.1

-0.7

-0.8

20

Clothing

-0.2

-0.1

-0.3

-0.2

20.7

19.7

0.2

0.2

-0.1

-0.2

-0.6

-0.5

-0.3

-0.4

21

Oil, gas, and coal

0.0

0.0

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

22

Wood products

0.1

0.2

0.1

0.1

-0.5

-0.4

0.2

0.2

0.0

0.0

0.1

0.2

0.2

0.4

23

Other goods

0.0

0.1

0.0

0.1

-0.7

-0.7

0.1

0.1

-0.1

-0.1

0.1

0.1

0.1

0.1

24

Utilities

0.1

-0.1

0.0

-0.1

0.1

-0.1

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

25

Construction

0.0

0.2

0.0

0.1

0.1

0.3

0.0

0.0

0.0

0.0

0.0

0.0

-0.1

-0.1

26

Retail and wholesale trade and warehousing

-0.1

-0.2

0.0

-0.1

0.2

0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

27

Transport services

0.5

0.3

0.1

-0.1

0.1

0.0

0.1

0.2

0.0

0.0

0.0

0.1

0.2

0.2

28

Communications

0.1

0.0

-0.1

-0.2

0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.1

0.1

29

Other financial services

0.1

0.2

0.3

0.3

-0.2

-0.2

0.1

0.1

0.0

0.0

0.0

0.0

0.0

0.0

30

Insurance

0.1

0.0

1.5

1.5

-1.4

-1.4

0.0

0.0

0.0

0.0

0.1

0.1

0.1

0.1

31

Other business services

0.1

0.1

-0.2

-0.2

0.1

0.2

0.1

0.1

0.0

0.0

0.0

0.0

0.1

0.1

32

Recreational and consumer services

0.0

0.0

-0.1

-0.2

0.2

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.1

0.1

33

Other services (public health, education, residential)

0.0

0.0

0.0

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Share of labor force displaced across sectors

0.1

0.0

0.1

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

105

Table 0.6 Unskilled labour employment, % change
NL
sectors

EU26
LR

SR

US

LR

SR

JP

LR

AUS/NZ

SR

LR

SR

BRIC

LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

0.1

-0.1

0.0

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

2

Other machinery and equipment

-0.5

-0.1

0.4

0.5

-1.3

-1.2

0.5

0.5

0.0

0.1

0.0

0.0

0.1

-0.1

3

Petro-chemicals

1.5

1.2

0.3

0.2

-0.2

-0.4

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.1

4

Electrical machinery and equipment

-2.1

-0.4

-2.2

-1.4

4.2

5.5

0.4

0.5

-0.5

-0.1

-0.2

-0.5

-0.5

-0.6

5

Processed foods, n.e.c.

-0.2

-0.3

0.0

-0.1

0.1

0.0

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

6

Iron and steel

4.0

5.0

-0.1

0.0

-1.1

-0.9

-0.1

-0.1

0.1

0.2

0.1

0.1

0.1

0.0

7

Motor vehicles

-3.7

-3.0

0.9

1.0

0.8

1.0

-1.9

-2.0

1.1

1.3

0.1

0.1

-0.9

-1.1

8

Crops, n.e.c. (except grains)

-1.6

-1.7

-1.8

-1.8

3.8

3.9

0.1

0.1

-0.5

-0.4

-0.2

-0.1

-0.3

-0.2

9

Vegetables and fruits

1.1

0.9

-0.2

-0.3

-0.2

-0.3

0.0

0.0

0.0

-0.1

0.0

0.0

0.0

0.0

10

Fabricated metals

0.3

0.5

0.1

0.2

-0.4

-0.3

0.1

0.1

0.0

0.1

0.1

0.1

0.1

0.1

11

Beverages and tobacco

1.6

1.5

0.1

-0.1

-0.1

-0.2

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

12

Non-ferrous metals

-0.2

-0.1

-0.4

-0.3

0.4

0.4

0.0

0.0

-0.2

-0.2

0.0

0.0

0.0

0.0

13

Vegetables oils

0.5

0.4

0.1

0.1

-0.7

-0.8

0.0

0.0

0.0

0.0

0.0

0.1

0.0

0.1

14

Paper, pulp, and publishing

0.2

0.2

-0.1

-0.1

-0.2

-0.3

0.1

0.1

0.0

0.1

0.1

0.1

0.2

0.2

15

Textiles

0.6

0.8

0.7

0.8

0.9

0.8

0.5

0.4

-0.4

-0.4

-0.2

-0.1

-0.3

-0.4

16

Dairy products

2.2

2.1

1.4

1.4

-3.6

-3.7

0.1

0.1

-0.1

-0.1

0.0

0.0

0.0

0.0

17

Manufactures, n.e.c.

-0.5

-0.7

0.2

0.3

0.3

0.2

0.1

0.1

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

18

Meats, except beef

-2.1

-2.2

-3.4

-3.5

3.6

3.6

0.2

0.2

-0.1

-0.1

0.1

0.1

0.2

0.2

19

Other transport equipment

-3.8

-3.5

-3.3

-3.1

3.1

3.0

-0.2

-0.1

0.1

0.2

0.1

0.1

-0.6

-0.7

20

Clothing

-0.1

-0.1

-0.2

-0.2

20.6

19.6

0.2

0.2

-0.1

-0.2

-0.6

-0.5

-0.3

-0.4

21

Oil, gas, and coal

0.0

0.0

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

22

Wood products

0.2

0.2

0.1

0.1

-0.5

-0.4

0.2

0.2

0.0

0.0

0.1

0.2

0.3

0.4

23

Other goods

0.0

0.1

0.0

0.1

-0.7

-0.8

0.1

0.1

-0.1

-0.1

0.1

0.1

0.1

0.1

The impact of Free Trade Agreements in the OECD

106

SR

NL
sectors
24

Utilities

25

Construction

26

Retail and wholesale trade and warehousing

27

Transport services

28

SR
0.2

EU26
LR

SR

0.0

0.0

0.1

0.3

-0.1

-0.1

0.6

Communications

29
30

US

LR

SR

JP

LR

SR

AUS/NZ
LR

SR

BRIC

LR

SR

ROW

LR

SR

LR

-0.1

0.0

-0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.1

0.0

0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

-0.1

0.1

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.3

0.1

0.0

0.0

-0.1

0.1

0.1

0.0

0.1

0.0

0.1

0.2

0.2

0.1

0.0

-0.1

-0.2

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.1

0.1

Other financial services

0.2

0.2

0.3

0.4

-0.2

-0.2

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

Insurance

0.1

0.0

1.5

1.5

-1.5

-1.5

0.0

0.0

0.0

0.0

0.1

0.1

0.1

0.1

31

Other business services

0.2

0.1

-0.1

-0.2

0.1

0.1

0.0

0.1

0.0

0.0

0.0

0.0

0.1

0.1

32

Recreational and consumer services

0.1

0.1

-0.1

-0.2

0.1

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.1

0.1

33

Other services (public health, education, residential)

0.0

0.0

0.0

0.0

0.0

-0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Share of labor force displaced across sectors

0.1

0.0

0.1

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

107

Annex C

Impact of an EU-Japan FTA

Table 0.7 Output effects of EU-Japan FTA on all Industries, % change
NL
sectors

EU26
LR

SR

JP

LR

SR

US
LR

SR

AUS/NZ

LR

SR

BRIC

LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

-0.4

-0.3

0.3

0.3

-1.1

-0.6

0.2

0.1

0.8

0.7

0.1

0.1

0.0

2

Other machinery and equipment

-0.4

-0.3

0.6

0.7

-15.4

-15.0

0.8

0.9

3.4

2.9

0.7

0.8

3.9

3.6

3

Petro-chemicals

0.1

0.2

0.1

0.1

-0.6

0.0

0.0

0.0

0.2

0.1

0.0

0.0

0.1

0.0

4

Electrical machinery and equipment

-3.7

-3.4

0.7

0.7

-8.2

-7.2

3.2

3.2

4.2

3.5

0.3

0.3

2.6

2.3

5

Processed foods, n.e.c.

1.1

1.2

0.3

0.3

-1.2

-0.6

0.0

0.0

0.5

0.4

0.0

0.0

0.0

-0.1

6

Iron and steel

-1.2

-0.5

-0.8

-0.8

0.3

1.2

-0.3

-0.3

-4.2

-4.8

0.0

0.0

1.1

0.6

7

Motor vehicles

1.5

2.0

-8.0

-8.3

50.9

53.4

-5.4

-5.5

-30.0

-32.0

-2.8

-2.9

-10.1

-10.9

8

Crops, n.e.c. (except grains)

0.1

0.1

0.2

0.2

-1.7

-1.5

0.1

0.1

0.2

0.3

0.0

0.0

0.1

0.1

9

Vegetables and fruits

0.0

0.0

0.1

0.1

-0.6

-0.5

0.1

0.0

0.2

0.2

0.0

0.0

0.0

0.0

10

Fabricated metals

-0.4

-0.3

-0.4

-0.5

-1.8

-1.0

-0.4

-0.4

0.1

-0.2

0.0

0.0

0.1

-0.1

11

Beverages and tobacco

-0.5

-0.4

0.4

0.4

-0.4

0.1

0.0

0.0

0.1

0.0

0.0

0.0

0.0

-0.1

12

Non-ferrous metals

0.0

0.0

0.2

0.1

-1.9

-1.2

0.0

0.0

1.7

1.4

0.2

0.2

0.5

0.5

13

Vegetables oils

0.2

0.2

0.5

0.4

-1.0

-0.4

0.0

0.0

0.5

0.5

-0.2

-0.2

-0.1

-0.1

-0.1

14

Paper, pulp, and publishing

-0.1

0.0

0.2

0.1

-1.5

-0.9

0.1

0.1

0.4

0.3

0.0

0.0

0.3

0.2

15

Textiles

-0.4

-0.3

1.8

1.8

-14.3

-14.8

0.5

0.4

3.0

3.0

0.1

0.2

-0.8

-0.8

16

Dairy products

-8.1

-8.1

0.6

0.6

-0.6

0.0

-0.1

-0.1

-0.5

-0.6

-0.1

-0.1

-0.1

-0.2

17

Manufactures, n.e.c.

-0.1

0.0

0.4

0.4

-2.5

-1.8

0.6

0.7

1.0

0.7

-0.1

-0.1

0.1

0.0

18

Meats, except beef

9.8

9.9

13.1

13.1

-84.5

-84.5

-1.5

-1.6

-0.4

-0.4

-1.6

-1.6

-1.5

-1.5

19

Other transport equipment

-0.6

-0.5

1.1

1.2

-0.9

-1.0

0.8

0.8

3.2

3.2

-0.4

-0.4

-2.8

-3.2

20

Clothing

0.6

0.7

2.2

2.2

-7.2

-6.9

4.2

4.2

2.4

2.4

-0.4

-0.4

-0.7

-0.7

21

Oil, gas, and coal

0.0

0.0

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

108

SR

NL
sectors
22

Wood products

23
24

SR

EU26
LR

SR

JP

LR

SR

US
LR

SR

AUS/NZ

LR

SR

BRIC

LR

SR

ROW

LR

SR

LR

0.1

0.2

0.4

0.4

-4.7

-4.0

0.0

0.0

1.0

0.8

-0.2

-0.2

0.0

-0.0

Other goods

0.3

0.4

0.6

0.6

-3.2

-2.7

-0.1

-0.1

0.5

0.4

0.0

-0.1

0.0

-0.0

Utilities

-0.1

0.0

0.0

0.0

-0.9

-0.2

0.0

0.0

0.2

0.1

0.0

0.0

0.1

-0.0

25

Construction

0.1

0.2

0.0

0.0

0.2

1.4

0.0

0.0

0.1

-0.2

0.0

0.0

0.0

-0.2

26

Retail and wholesale trade and warehousing

0.0

0.1

0.0

0.0

0.1

0.8

0.0

0.0

0.1

0.0

0.0

0.0

0.0

-0.1

27

Transport services

0.4

0.5

0.3

0.3

-0.6

-0.1

0.0

0.0

0.3

0.3

0.0

0.0

0.2

0.1

28

Communications

0.0

0.1

0.1

0.1

-0.3

0.4

0.0

0.0

0.1

0.0

0.0

0.0

0.0

-0.1

29

Other financial services

0.1

0.1

0.1

0.1

-0.5

0.2

0.0

0.0

0.1

0.0

0.0

0.0

0.0

-0.1

30

Insurance

0.0

0.1

0.2

0.1

-0.3

0.2

0.0

0.0

0.2

0.1

-0.1

-0.1

0.0

-0.0

31

Other business services

0.0

0.1

0.0

-0.1

-0.5

0.2

0.1

0.1

0.1

-0.1

-0.1

-0.1

0.0

-0.1

32

Recreational and consumer services

0.0

0.1

0.0

0.0

-0.1

0.6

0.0

0.0

0.3

0.2

0.0

0.0

0.0

-0.1

33

Other services (public health, education, residential)

0.0

0.1

0.0

-0.1

0.3

1.0

0.0

0.0

0.1

0.1

0.0

0.0

0.0

-0.1

Table 0.8 Export Effects of an EU-Japan FTA on all Industries, % change
NL
sectors
1

SR

EU26

LR

SR

JP

LR

SR

US
LR

SR

AUS/NZ

LR

SR

BRIC

LR

SR

ROW

LR
0.2

SR
0.2

LR

Chemicals, rubber, and plastics

0.0

0.0

1.0

1.0

-1.8

-1.9

0.7

0.7

1.8

1.8

0.3

0.3

2

Other machinery and equipment

-0.1

0.1

1.6

1.6

-19.6

-19.6

1.8

1.9

4.0

3.6

1.4

1.5

4.1

3.9

3

Petro-chemicals

0.5

0.5

0.6

0.5

0.3

0.3

0.4

0.4

0.4

0.4

0.4

0.4

0.3

0.4

4

Electrical machinery and equipment

-4.0

-3.7

1.3

1.3

-11.0

-10.4

4.5

4.5

5.1

4.5

0.6

0.7

3.2

2.9

5

Processed foods, n.e.c.

3.0

3.1

2.0

2.0

-0.7

-0.3

0.5

0.4

1.5

1.4

0.5

0.5

0.2

0.2

6

Iron and steel

-1.2

-0.6

-0.6

-0.6

-6.0

-4.6

-0.1

0.1

-2.7

-3.3

-0.1

-0.1

1.4

0.9

7

Motor vehicles

0.3

0.8

-8.3

-8.5

92.6

96.6

-6.4

-6.6

-27.7

-29.7

-5.4

-5.5

-10.6

-11.5

8

Crops, n.e.c. (except grains)

0.4

0.3

0.5

0.5

1.2

-0.3

0.4

0.4

0.2

0.3

0.1

0.0

0.3

0.4

The impact of Free Trade Agreements in the OECD

109

NL
sectors

0.2

EU26

LR
0.1

SR
0.2

JP

LR
0.2

SR

US
LR

-1.1

SR

-1.8

AUS/NZ

LR
0.3

SR
0.3

BRIC

LR
0.4

SR

ROW

LR

SR

LR

9

Vegetables and fruits

10

Fabricated metals

-0.6

-0.7

0.3

0.3

-4.5

-5.0

0.6

0.5

11

Beverages and tobacco

-0.6

-0.4

2.0

1.9

-1.6

-1.0

0.8

0.8

12

Non-ferrous metals

0.0

0.0

1.2

1.2

-4.8

-5.0

0.9

0.8

2.9

2.7

0.4

0.4

0.6

0.6

13

Vegetables oils

0.4

0.4

0.9

0.9

12.0

11.9

0.3

0.2

1.0

1.0

-0.3

-0.4

0.0

0.0

14

Paper, pulp, and publishing

0.1

0.1

0.5

0.5

-6.4

-6.8

0.7

0.7

1.2

1.2

0.1

0.1

0.3

0.3

15

Textiles

-0.4

-0.3

3.0

3.0

-13.1

-14.3

1.1

1.0

4.1

4.1

-0.1

-0.1

-0.9

-0.9

16

Dairy products

6.2

6.2

4.0

4.0

*

*

-1.8

-2.0

-2.1

-2.3

-1.1

-1.3

-0.5

-0.5

17

Manufactures, n.e.c.

-0.1

-0.1

2.3

2.3

-5.8

-5.7

0.9

1.0

2.7

2.5

-0.2

-0.2

0.2

0.1

18

Meats, except beef

12.6

12.7

48.9

49.1

88.6

87.8

-13.2

-13.3

-9.0

-9.0

-13.9

-14.0

-17.0

-16.9

19

Other transport equipment

-0.5

-0.4

2.0

2.2

4.1

3.4

1.2

1.3

6.1

6.2

-0.3

-0.2

-2.6

-3.0

20

Clothing

0.7

0.8

5.7

5.7

-0.1

-0.6

4.6

4.5

3.5

3.6

-0.3

-0.3

-1.3

-1.3

21

Oil, gas, and coal

0.4

0.4

0.4

0.4

*

*

0.4

0.5

0.3

0.4

0.4

0.4

0.4

0.4

22

Wood products

0.1

0.1

0.9

0.9

-3.6

-4.2

0.3

0.3

2.0

2.4

-0.4

-0.3

0.0

0.2

23

Other goods

0.8

0.7

1.3

1.3

-3.3

-3.7

0.3

0.2

0.8

0.8

0.0

-0.1

0.2

0.2

24

Utilities

0.2

0.3

0.5

0.5

-7.2

-6.4

0.7

0.6

2.0

1.8

-0.2

-0.3

0.2

0.1

25

Construction

0.8

0.9

1.5

1.7

-3.0

-3.7

1.5

1.8

3.8

4.6

0.8

1.1

1.0

1.3

26

Retail and wholesale trade and warehousing

0.7

0.7

0.7

0.8

-2.7

-3.3

1.0

1.1

1.5

1.6

0.1

0.1

0.6

0.7

27

Transport services

0.9

1.0

0.9

0.9

-0.3

-0.4

0.8

0.8

1.3

1.4

0.6

0.6

0.8

0.8

28

Communications

0.1

0.1

0.8

0.8

-3.0

-2.9

0.5

0.4

1.1

1.0

-0.3

-0.3

0.1

0.1

29

Other financial services

1.3

1.2

1.0

1.0

5.2

5.5

0.2

0.2

1.1

1.0

-0.2

-0.2

0.1

0.1

30

Insurance

0.6

0.6

0.8

0.8

-2.7

-3.1

0.5

0.5

1.3

1.3

-0.1

-0.1

0.3

0.4

31

Other business services

0.3

0.3

0.8

0.7

1.8

1.6

0.8

0.8

1.6

1.6

-0.1

-0.1

0.3

0.3

32

Recreational and consumer services

0.2

0.2

0.6

0.6

-4.9

-4.9

0.7

0.7

1.3

1.2

0.0

0.0

0.4

0.4

33

Other services (public health, education, residential)

0.3

0.2

0.7

0.7

-5.7

-5.8

0.7

0.6

1.5

1.4

0.1

0.0

0.4

0.5

The impact of Free Trade Agreements in the OECD

110

SR

0.4

0.2

0.2

0.2

0.2

0.8

0.6

-0.1

-0.1

0.5

0.4

0.2

0.1

0.3

0.2

0.1

0.0

Table 0.9 Producer Price Effects of an EU-Japan FTA on all Industries, % change
NL
sectors

SR

EU26
LR

SR

JP

LR

SR

US
LR

SR

AUS/NZ

LR

SR

BRIC

LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

0.2

0.2

0.1

0.1

1.7

1.7

0.2

0.2

0.0

0.0

0.3

0.3

0.3

0.3

2

Other machinery and equipment

0.2

0.1

-0.1

-0.1

4.2

4.2

0.1

0.1

-0.4

-0.3

0.2

0.2

-0.3

-0.3

3

Petro-chemicals

0.4

0.4

0.4

0.4

0.5

0.5

0.4

0.4

0.3

0.4

0.4

0.4

0.4

0.4

4

Electrical machinery and equipment

0.6

0.5

-0.1

-0.1

2.9

2.9

-0.3

-0.3

-0.4

-0.3

0.2

0.2

-0.1

-0.1

5

Processed foods, n.e.c.

-0.5

-0.5

-0.1

0.0

1.7

1.5

0.1

0.2

-0.2

-0.2

0.2

0.2

0.2

0.2

6

Iron and steel

0.4

0.3

0.3

0.3

1.7

1.4

0.2

0.2

0.9

1.1

0.3

0.3

0.0

0.1

7

Motor vehicles

-0.1

-0.3

1.8

1.9

-11.6

-12.0

1.2

1.3

7.0

7.6

0.9

1.0

2.5

2.7

8

Crops, n.e.c. (except grains)

0.2

0.2

0.2

0.2

0.9

1.1

0.2

0.2

0.1

0.1

0.2

0.2

0.2

0.2

9

Vegetables and fruits

0.2

0.2

0.2

0.2

1.2

1.4

0.2

0.1

0.1

0.1

0.2

0.2

0.2

0.1

10

Fabricated metals

0.1

0.1

0.0

0.0

2.1

2.1

0.1

0.1

0.1

0.1

0.3

0.3

0.2

0.2

11

Beverages and tobacco

0.5

0.4

-0.3

-0.3

2.3

1.8

0.1

0.2

-0.1

-0.1

0.3

0.3

0.2

0.2

12

Non-ferrous metals

0.1

0.1

0.1

0.1

1.4

1.4

0.2

0.2

0.0

0.0

0.3

0.3

0.2

0.2

13

Vegetables oils

0.1

0.1

0.1

0.1

0.3

0.3

0.2

0.2

0.0

0.0

0.2

0.3

0.2

0.2

14

Paper, pulp, and publishing

0.1

0.1

0.0

0.0

2.1

2.1

0.2

0.2

-0.1

-0.1

0.3

0.3

0.2

0.2

15

Textiles

0.1

0.1

-0.3

-0.2

3.8

4.0

0.1

0.1

-0.5

-0.5

0.3

0.3

0.3

0.3

16

Dairy products

-0.4

-0.4

0.0

0.0

1.0

1.0

0.1

0.1

-0.1

-0.1

0.3

0.3

0.2

0.2

17

Manufactures, n.e.c.

0.1

0.1

0.0

0.0

2.4

2.3

0.1

0.1

-0.2

-0.1

0.3

0.3

0.2

0.2

18

Meats, except beef

0.2

0.2

0.2

0.2

-2.3

-2.2

0.1

0.1

-0.1

-0.1

0.2

0.2

0.2

0.1

19

Other transport equipment

0.2

0.2

-0.1

-0.2

1.8

1.9

0.1

0.1

-0.5

-0.5

0.3

0.3

0.6

0.7

20

Clothing

0.0

0.0

-0.3

-0.3

3.0

3.1

-0.4

-0.3

-0.4

-0.4

0.3

0.3

0.3

0.3

21

Oil, gas, and coal

0.4

0.4

0.4

0.4

0.3

0.4

0.4

0.4

0.4

0.4

0.4

0.4

0.4

0.4

22

Wood products

0.1

0.1

0.1

0.1

1.7

1.8

0.2

0.2

0.0

0.0

0.3

0.3

0.2

0.2

The impact of Free Trade Agreements in the OECD

111

NL
sectors

SR

EU26
LR

0.1

SR

0.1

0.1

SR

0.1

US
LR

1.5

SR

1.6

AUS/NZ

LR

0.1

SR

0.1

BRIC

LR
0.0

SR

0.0

ROW

LR

0.2

0.2

SR

LR

23

Other goods

24

Utilities

0.2

0.2

0.1

0.1

1.9

1.7

0.2

0.2

-0.1

0.0

0.3

0.3

0.3

0.3

25

Construction

0.1

0.1

0.0

0.0

2.2

2.5

0.1

0.1

-0.1

-0.1

0.3

0.3

0.2

0.2

26

Retail and wholesale trade and warehousing

0.1

0.1

0.0

0.0

2.2

2.4

0.1

0.1

-0.1

-0.1

0.3

0.3

0.2

0.2

27

Transport services

0.2

0.2

0.1

0.1

2.0

2.1

0.2

0.2

0.0

0.0

0.3

0.3

0.2

0.2

28

Communications

0.1

0.1

0.0

0.0

2.3

2.3

0.1

0.1

-0.1

-0.1

0.3

0.3

0.2

0.2

29

Other financial services

0.1

0.1

0.0

0.0

2.3

2.1

0.1

0.1

-0.2

-0.2

0.3

0.3

0.2

0.2

0.2

0.2

30

Insurance

0.1

0.1

0.0

0.0

2.3

2.5

0.1

0.1

-0.2

-0.2

0.2

0.3

0.2

0.2

31

Other business services

0.1

0.1

0.0

0.0

2.1

2.1

0.1

0.1

-0.1

-0.1

0.3

0.3

0.2

0.2

32

Recreational and consumer services

0.1

0.1

0.0

0.0

2.3

2.3

0.2

0.2

-0.1

-0.1

0.3

0.3

0.2

0.2

33

Other services (public health, education, residential)

0.1

0.1

0.0

0.0

2.4

2.4

0.1

0.1

-0.2

-0.1

0.3

0.3

0.2

0.1

Table 0.10

Skilled labour employment, % change
NL

EU26

sectors

SR

LR

SR

1

Chemicals, rubber, and plastics

-0.3

-0.4

0.3

2

Other machinery and equipment

-0.4

-0.3

3

Petro-chemicals

0.1

4

Electrical machinery and equipment

-3.7

5

Processed foods, n.e.c.

1.0

6

Iron and steel

7
8
9

JP

LR

US
SR

AUS/NZ

LR

SR

BRIC

LR

SR

ROW

SR

LR

0.3

-1.2

-1.5

0.1

0.1

0.7

0.6

0.1

0.1

0.0

0.0

0.6

0.7

-14.6

-14.7

0.8

0.8

3.0

2.6

0.6

0.7

3.5

3.3

0.0

0.2

0.2

-0.8

-1.4

0.0

0.0

0.1

0.2

0.0

0.0

0.0

0.1

-3.5

0.6

0.6

-7.8

-7.6

2.9

3.0

3.5

3.0

0.3

0.4

2.3

2.2

1.0

0.3

0.3

-1.3

-1.5

0.0

0.0

0.4

0.4

0.0

0.0

-0.1

0.0

-1.0

-0.5

-0.8

-0.7

0.1

0.2

-0.3

-0.3

-3.8

-4.4

0.0

0.0

0.9

0.6

Motor vehicles

1.4

1.8

-7.5

-7.8

46.8

48.3

-5.1

-5.2

-27.8

-29.5

-2.4

-2.5

-9.0

-9.7

Crops, n.e.c. (except grains)

0.2

0.1

0.3

0.3

-2.1

-2.0

0.1

0.1

0.3

0.3

0.0

0.0

0.1

0.1

Vegetables and fruits

0.1

0.0

0.2

0.1

-0.9

-0.9

0.1

0.0

0.2

0.2

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

112

JP

LR

LR

SR

LR

NL

EU26

sectors

SR

LR

10

Fabricated metals

-0.3

-0.3

11

Beverages and tobacco

-0.5

12

Non-ferrous metals

0.0

13

Vegetables oils

14
15

SR

JP

US
SR

AUS/NZ

LR

SR

BRIC

LR

SR

ROW

LR

SR

LR

LR

SR

-0.4

-0.4

-1.9

-1.7

-0.4

-0.4

0.0

-0.2

0.0

0.0

0.0

LR
-0.1

-0.4

0.4

0.4

-0.6

-1.1

0.0

0.0

0.0

0.1

0.0

0.0

-0.1

0.0

0.0

0.2

0.2

-2.0

-2.1

0.0

0.0

1.4

1.3

0.2

0.2

0.4

0.5

0.2

0.2

0.5

0.5

-1.1

-1.3

0.0

0.0

0.4

0.4

-0.1

-0.2

-0.1

0.0

Paper, pulp, and publishing

0.0

-0.1

0.2

0.2

-1.6

-1.7

0.1

0.1

0.2

0.3

0.0

0.0

0.2

0.3

Textiles

-0.3

-0.3

1.7

1.8

-13.8

-14.6

0.6

0.5

2.8

2.8

0.1

0.1

-0.7

-0.7

16

Dairy products

-7.7

-7.7

0.6

0.6

-0.6

-1.0

-0.1

-0.1

-0.6

-0.5

-0.1

-0.1

-0.2

-0.1

17

Manufactures, n.e.c.

0.0

0.0

0.4

0.4

-2.5

-2.5

0.6

0.6

0.8

0.6

-0.1

-0.1

0.1

0.1

18

Meats, except beef

9.1

9.1

12.2

12.2

-82.7

-82.8

-1.5

-1.5

-0.4

-0.4

-1.5

-1.5

-1.4

-1.4

19

Other transport equipment

-0.6

-0.5

1.0

1.2

-1.0

-1.5

0.7

0.8

3.0

3.0

-0.3

-0.3

-2.5

-2.8

20

Clothing

0.6

0.6

2.1

2.1

-7.0

-7.1

4.7

4.6

2.2

2.2

-0.4

-0.4

-0.7

-0.7

21

Oil, gas, and coal

0.0

0.0

0.1

0.1

-0.4

-0.4

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

22

Wood products

0.1

0.1

0.4

0.5

-4.6

-4.6

0.0

0.0

0.8

0.8

-0.2

-0.2

0.0

0.0

23

Other goods

0.4

0.4

0.7

0.7

-3.6

-3.4

-0.1

-0.1

0.5

0.5

-0.1

-0.1

0.0

0.0

24

Utilities

-0.1

-0.1

0.1

0.1

-1.0

-1.6

0.0

0.0

0.1

0.1

0.0

0.0

0.1

0.1

25

Construction

0.1

0.1

0.0

0.1

0.1

0.8

0.0

0.0

0.0

-0.2

0.0

0.0

0.0

-0.1

26

Retail and wholesale trade and warehousing

0.0

0.0

0.1

0.1

-0.1

-0.1

-0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

27

Transport services

0.4

0.4

0.3

0.3

-0.8

-1.0

0.0

0.0

0.2

0.2

0.0

0.0

0.1

0.2

28

Communications

0.0

0.0

0.1

0.1

-0.5

-0.7

0.0

0.0

0.0

0.1

0.0

0.0

0.0

0.0

29

Other financial services

0.1

0.1

0.1

0.1

-0.7

-1.0

0.0

0.0

0.0

0.1

0.0

0.0

0.0

0.0

30

Insurance

0.0

0.0

0.2

0.2

-0.4

-0.5

0.0

0.0

0.1

0.1

-0.1

-0.1

0.0

0.0

31

Other business services

0.0

0.0

0.0

0.0

-0.7

-0.8

0.0

0.0

0.0

-0.1

-0.1

-0.1

0.0

0.0

32

Recreational and consumer services

0.0

0.0

0.1

0.1

-0.3

-0.5

0.0

0.0

0.2

0.2

0.0

0.0

0.0

0.0

33

Other services (public health, education, residential)

0.0

0.0

0.0

0.0

0.0

-0.2

0.0

0.0

0.0

0.1

0.0

0.0

0.0

0.0

Share of labor force displaced across sectors

0.1

0.0

0.0

0.0

0.0

0.0

1.1

1.1

0.0

0.0

0.0

0.0

0.1

0.1

The impact of Free Trade Agreements in the OECD

113

Table 0.11

Unskilled labour employment, % change
NL
SR

LR

1

Chemicals, rubber, and plastics

-0.3

-0.4

0.3

2

Other machinery and equipment

-0.4

-0.3

3

Petro-chemicals

0.1

4

Electrical machinery and equipment

-3.7

SR

JP

LR

US
SR

AUS/NZ

LR

SR

BRIC

LR

SR

ROW

SR

LR

LR

SR

0.3

-1.1

-1.3

0.2

0.2

0.7

0.7

0.1

0.1

0.0

LR
0.0

0.6

0.7

-14.4

-14.5

0.8

0.8

3.0

2.7

0.7

0.7

3.5

3.3

0.0

0.2

0.2

-0.6

-1.2

0.0

0.0

0.1

0.3

0.0

0.0

0.1

0.1

-3.5

0.5

0.6

-7.6

-7.4

2.9

3.0

3.6

3.1

0.3

0.4

2.3

2.2

5

Processed foods, n.e.c.

1.0

1.0

0.3

0.3

-1.1

-1.3

0.0

0.0

0.4

0.5

0.0

0.0

0.0

0.0

6

Iron and steel

-1.0

-0.5

-0.8

-0.7

0.3

0.4

-0.3

-0.3

-3.8

-4.3

0.0

0.0

1.0

0.6

7

Motor vehicles

1.4

1.8

-7.6

-7.8

47.1

48.6

-5.1

-5.2

-27.7

-29.4

-2.4

-2.5

-9.0

-9.7

8

Crops, n.e.c. (except grains)

0.2

0.1

0.3

0.3

-2.0

-2.0

0.1

0.1

0.3

0.4

0.0

0.0

0.1

0.1

9

Vegetables and fruits

0.1

0.0

0.2

0.1

-0.9

-0.8

0.1

0.0

0.2

0.2

0.0

0.0

0.0

0.0

10

Fabricated metals

-0.4

-0.3

-0.4

-0.4

-1.7

-1.5

-0.4

-0.4

0.0

-0.1

0.0

0.0

0.1

0.0

11

Beverages and tobacco

-0.5

-0.4

0.4

0.4

-0.4

-0.9

0.0

0.0

0.0

0.1

0.0

0.0

0.0

0.0

12

Non-ferrous metals

0.0

-0.1

0.2

0.2

-1.8

-1.9

0.0

0.0

1.5

1.4

0.2

0.2

0.5

0.5

13

Vegetables oils

0.2

0.2

0.5

0.4

-0.9

-1.1

0.0

0.0

0.5

0.5

-0.1

-0.2

-0.1

0.0

14

Paper, pulp, and publishing

-0.1

-0.1

0.2

0.2

-1.4

-1.5

0.1

0.1

0.3

0.3

0.0

0.0

0.3

0.3

15

Textiles

-0.3

-0.3

1.7

1.7

-13.6

-14.4

0.6

0.6

2.8

2.9

0.1

0.1

-0.7

-0.6

16

Dairy products

-7.7

-7.7

0.6

0.6

-0.5

-0.8

-0.1

-0.1

-0.5

-0.4

-0.1

-0.1

-0.1

-0.1

17

Manufactures, n.e.c.

0.0

0.0

0.4

0.4

-2.4

-2.3

0.6

0.7

0.9

0.7

-0.1

-0.1

0.1

0.1

18

Meats, except beef

9.1

9.1

12.1

12.2

-82.7

-82.7

-1.4

-1.5

-0.4

-0.3

-1.5

-1.5

-1.4

-1.3

19

Other transport equipment

-0.6

-0.5

1.0

1.2

-0.8

-1.3

0.7

0.8

3.0

3.0

-0.3

-0.3

-2.5

-2.8

20

Clothing

0.6

0.6

2.1

2.1

-6.8

-6.9

4.7

4.6

2.2

2.3

-0.4

-0.4

-0.7

-0.6

21

Oil, gas, and coal

0.0

0.0

0.1

0.1

-0.3

-0.4

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

22

Wood products

0.1

0.1

0.4

0.4

-4.4

-4.4

0.0

0.0

0.9

0.9

-0.1

-0.1

0.0

0.1

23

Other goods

0.4

0.4

0.7

0.7

-3.5

-3.3

-0.1

-0.1

0.6

0.6

-0.1

-0.1

0.0

0.0

The impact of Free Trade Agreements in the OECD

114

EU26

sectors

NL

EU26
LR

US
SR

AUS/NZ

LR

SR

BRIC

LR

SR

ROW

SR

LR

Utilities

-0.1

-0.1

0.0

25

Construction

0.0

0.1

26

Retail and wholesale trade and warehousing

0.0

0.0

27

Transport services

0.4

28

Communications

0.0

29

Other financial services

0.0

30

Insurance

0.0

31

Other business services

0.0

0.0

0.0

0.0

-0.5

-0.6

0.1

0.1

0.0

0.0

0.0

0.0

0.0

0.0

32

Recreational and consumer services

0.0

0.0

0.1

0.0

-0.1

-0.3

0.0

0.0

0.2

0.3

0.0

0.0

0.0

0.1

33

Other services (public health, education, residential)

0.0

0.0

0.0

0.0

0.2

0.0

0.0

0.0

0.1

0.2

0.0

0.0

0.0

0.1

Share of labor force displaced across sectors

0.1

0.0

0.0

0.0

0.0

0.0

1.1

1.1

0.0

0.0

0.0

0.0

0.1

0.1

24

SR

JP

sectors

SR

LR

0.1

-0.8

-1.4

0.0

0.0

0.1

0.2

0.0

0.0

0.3

1.0

0.0

0.0

0.1

-0.1

0.0

0.0

0.0

0.0

0.1

0.1

0.1

0.1

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.1

0.3

0.3

0.3

-0.6

-0.8

0.0

0.0

0.3

0.4

0.0

0.0

0.2

0.3

-0.1

0.1

0.1

-0.3

-0.5

0.0

0.0

0.1

0.2

0.0

0.0

0.0

0.1

0.1

0.1

0.1

-0.5

-0.8

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

0.0

0.2

0.2

-0.2

-0.3

0.0

0.0

0.1

0.2

-0.1

-0.1

0.0

0.1

0.0

LR
0.0

SR
0.1

LR
0.1

The impact of Free Trade Agreements in the OECD

115

Annex D
Table 0.12

Impact of an EU-Aus/NZ FTA
Output effects of EU – Aus/NZ FTA on all Industries, % change
NL

sectors

EU26
LR

SR

Aus/NZ

LR

SR

US

LR

SR

JP

LR

SR

BRIC
LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

0.1

0.1

0.0

0.1

-0.8

-0.3

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

2

Other machinery and equipment

0.0

0.1

0.2

0.2

-10.4

-9.0

-0.1

-0.1

0.6

0.6

0.0

-0.1

-0.2

-0.3

3

Petro-chemicals

0.0

0.1

0.0

0.1

0.3

0.6

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

4

Electrical machinery and equipment

-0.5

-0.1

-0.7

-0.5

9.2

11.7

-0.3

-0.2

0.4

0.4

0.1

0.1

-0.1

-0.1

5

Processed foods, n.e.c.

-0.1

0.0

-0.1

0.0

1.0

1.3

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

6

Iron and steel

0.3

0.5

0.1

0.2

-5.9

-4.6

0.0

0.0

0.0

0.0

0.0

0.0

-0.1

-0.1

7

Motor vehicles

-0.4

-0.3

0.5

0.6

-8.6

-6.9

0.2

0.3

-1.7

-1.9

0.1

0.1

0.2

0.2

8

Crops, n.e.c. (except grains)

0.0

0.0

0.0

-0.1

0.4

0.4

0.0

0.0

0.1

0.0

0.0

0.0

0.0

0.0

9

Vegetables and fruits

-0.1

-0.1

-0.1

-0.1

1.1

1.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

10

Fabricated metals

0.2

0.3

0.1

0.2

-3.1

-2.5

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

11

Beverages and tobacco

-0.1

0.0

-0.1

-0.1

1.8

2.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

12

Non-ferrous metals

0.0

0.1

0.0

0.0

0.7

1.6

0.0

0.0

0.1

0.1

0.0

0.0

-0.1

-0.1

13

Vegetables oils

0.0

0.1

0.0

0.0

0.7

1.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

14

Paper, pulp, and publishing

0.0

0.1

0.0

0.1

-1.4

-1.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

15

Textiles

0.3

0.3

0.2

0.3

-4.4

-3.8

0.0

0.0

0.5

0.5

-0.1

-0.1

0.1

0.0

16

Dairy products

-2.4

-2.4

-2.1

-2.1

38.7

39.2

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

17

Manufactures, n.e.c.

0.2

0.2

0.1

0.1

-2.0

-1.2

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

18

Meats, except beef

0.2

0.2

-0.1

0.0

0.6

0.8

0.0

0.0

0.2

0.2

0.0

0.0

0.0

0.0

19

Other transport equipment

0.0

0.1

-0.1

-0.1

0.7

1.3

-0.1

-0.1

0.4

0.4

0.0

0.0

0.1

0.1

20

Clothing

0.1

0.2

0.3

0.4

-6.7

-6.4

0.2

0.1

0.2

0.2

-0.2

-0.2

0.1

0.0

21

Oil, gas, and coal

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

116

SR

NL
sectors

SR

EU26
LR

SR

Aus/NZ

LR

SR

US

LR

SR

JP

LR
0.0

BRIC
LR

SR

ROW

LR

SR

LR

22

Wood products

0.1

0.1

0.1

0.1

-1.8

-1.3

23

Other goods

-0.2

-0.1

-0.2

-0.1

1.8

2.1

0.0

24

Utilities

0.0

0.0

0.0

0.0

0.2

0.5

0.0

25

Construction

0.0

0.1

0.0

0.1

0.2

0.8

0.0

0.0

26

Retail and wholesale trade and warehousing

-0.1

0.0

0.0

0.0

0.1

0.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

27

Transport services

0.0

0.0

0.0

0.0

0.4

0.7

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

28

Communications

0.4

0.4

0.1

0.1

-1.4

-1.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

29

Other financial services

0.0

0.1

0.0

0.1

-0.8

-0.5

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

30

Insurance

0.0

0.0

0.0

0.0

-0.9

-0.6

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

31

Other business services

0.0

0.1

0.0

0.1

-1.0

-0.6

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

32

Recreational and consumer services

0.1

0.2

0.0

0.1

-0.3

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

33

Other services (public health, education, residential)

0.0

0.0

0.0

0.0

0.1

0.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Table 0.13

0.0

SR
0.1

0.1

0.0

0.0

0.0

0.0

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Export Effects of an EU-AUS/NZ FTA on all Industries, % change
N

sectors

SR

EU26
LR

SR

Aus/NZ

LR

SR

US

LR

JP

SR

LR

SR

BRIC
LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

0.2

0.2

0.1

0.2

7.0

7.4

-0.1

-0.1

0.1

0.1

-0.1

-0.1

-0.1

-0.1

2

Other machinery and equipment

0.2

0.3

0.4

0.4

-0.9

0.7

-0.3

-0.3

0.7

0.8

-0.2

-0.2

-0.3

-0.4

3

Petro-chemicals

0.0

0.0

0.1

0.1

1.0

1.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

4

Electrical machinery and equipment

-0.4

-0.1

-0.7

-0.5

15.6

18.2

-0.3

-0.3

0.7

0.7

0.2

0.1

-0.1

-0.1

5

Processed foods, n.e.c.

0.1

0.1

0.0

0.1

6.2

6.5

-0.1

-0.1

0.0

0.0

-0.1

-0.1

-0.1

-0.1

6

Iron and steel

0.3

0.5

0.2

0.3

-4.0

-2.6

0.0

0.0

0.2

0.2

0.0

0.0

-0.1

-0.2

7

Motor vehicles

-0.3

-0.2

0.8

0.9

-4.7

-2.6

0.2

0.2

-3.2

-3.3

0.1

0.1

0.1

0.0

8

Crops, n.e.c. (except grains)

0.0

0.0

0.0

-0.1

3.1

2.8

-0.1

-0.1

0.1

0.1

-0.1

0.0

-0.1

0.0

The impact of Free Trade Agreements in the OECD

117

N

9

SR

LR

Vegetables and fruits

-0.1

-0.1

SR
-0.2

Aus/NZ

LR
-0.2

SR

US

LR
2.8

2.7

JP

SR

LR

-0.1

-0.1

SR

BRIC
LR

0.0

SR

0.0

-0.1

ROW

LR
-0.1

SR
-0.1

LR
-0.1

10

Fabricated metals

0.6

0.7

0.6

0.6

3.5

3.9

-0.1

-0.1

0.3

0.3

-0.2

-0.2

-0.1

-0.1

11

Beverages and tobacco

0.0

0.0

0.0

0.0

10.9

11.3

-0.2

-0.2

0.0

0.0

-0.1

-0.1

-0.1

-0.1
-0.1

12

Non-ferrous metals

0.1

0.1

0.0

0.1

3.0

3.6

-0.1

-0.1

0.2

0.2

-0.1

-0.1

-0.1

13

Vegetables oils

0.1

0.1

0.1

0.1

10.3

10.5

-0.1

-0.1

0.0

0.0

-0.1

-0.1

0.0

0.0

14

Paper, pulp, and publishing

0.2

0.2

0.3

0.3

0.7

1.0

-0.1

-0.1

0.0

0.1

-0.1

-0.1

-0.1

-0.1

15

Textiles

0.7

0.8

0.6

0.7

4.3

4.9

-0.1

-0.1

0.6

0.6

-0.3

-0.3

0.0

0.0

16

Dairy products

-1.2

-1.2

-1.2

-1.2

141.2

142.0

-0.9

-0.9

*

*

-0.4

-0.4

-0.2

-0.3

17

Manufactures, n.e.c.

0.5

0.4

0.5

0.5

5.8

6.7

-0.1

-0.1

0.3

0.3

-0.1

-0.1

0.0

-0.1

18

Meats, except beef

0.3

0.3

0.0

0.0

20.7

20.7

-0.1

-0.1

0.3

0.3

0.0

0.0

-0.1

-0.1

19

Other transport equipment

0.0

0.1

0.0

0.0

10.6

11.3

-0.3

-0.3

0.6

0.7

-0.1

-0.1

0.1

0.0

20

Clothing

1.2

1.3

1.4

1.5

14.8

15.1

-0.1

-0.1

0.4

0.4

-0.3

-0.3

0.0

0.0

21

Oil, gas, and coal

-0.1

0.0

0.0

0.0

0.5

0.4

0.0

0.0

*

*

-0.2

-0.2

0.0

0.0

22

Wood products

0.3

0.3

0.3

0.3

1.9

2.1

-0.1

-0.1

0.2

0.2

-0.1

-0.1

-0.1

-0.1

23

Other goods

0.0

0.0

0.0

0.0

1.8

1.9

-0.1

-0.1

0.1

0.1

-0.1

0.0

0.0

-0.1

24

Utilities

0.0

0.0

-0.1

0.0

0.9

1.6

0.0

0.0

0.3

0.2

0.1

0.1

0.0

0.0

25

Construction

0.0

0.0

-0.1

-0.1

1.9

1.8

0.0

0.0

0.2

0.2

0.0

0.0

0.0

0.0

26

Retail and wholesale trade and warehousing

0.1

0.1

0.2

0.2

2.8

2.9

-0.1

-0.1

0.2

0.2

0.1

0.1

0.0

0.0

27

Transport services

0.1

0.1

0.0

0.0

1.4

1.4

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

28

Communications

1.9

2.0

1.0

1.0

5.0

5.4

-0.1

-0.1

-0.2

-0.2

0.0

0.0

-0.1

-0.1

29

Other financial services

0.1

0.2

0.4

0.4

8.4

8.7

0.0

0.1

0.3

0.3

0.0

0.1

0.1

0.1

30

Insurance

0.1

0.1

0.1

0.1

4.1

4.3

-0.1

-0.1

0.2

0.2

0.0

0.0

0.0

0.0

31

Other business services

0.3

0.3

0.2

0.3

7.8

7.9

0.0

0.0

0.1

0.1

0.1

0.1

0.0

0.0

32

Recreational and consumer services

1.5

1.5

0.2

0.3

2.9

3.1

-0.1

-0.1

0.1

0.1

0.0

0.0

0.0

0.0

33

Other services (public health, education, residential)

-0.1

-0.1

-0.2

-0.2

0.7

0.9

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

118

EU26

sectors

Table 0.14

Producer Price Effects of an EU-AUS/NZ FTA on all Industries, % change
NL

sectors

SR

EU2
LR

SR

Aus/NZ

LR

SR

US

LR

SR

JP

LR

BRIC

SR

LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

0.0

0.0

0.0

0.0

-0.7

-0.7

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

2

Other machinery and equipment

0.0

0.0

0.0

0.0

0.7

0.5

0.0

0.0

-0.2

-0.2

0.0

0.0

0.0

0.0

3

Petro-chemicals

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

4

Electrical machinery and equipment

0.0

0.0

0.1

0.1

-1.3

-1.6

0.0

0.0

-0.1

-0.1

-0.1

-0.1

0.0

0.0

5

Processed foods, n.e.c.

0.0

0.0

0.0

0.0

-0.7

-0.8

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

6

Iron and steel

-0.1

-0.1

0.0

0.0

1.0

0.6

-0.1

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

7

Motor vehicles

0.1

0.1

-0.1

-0.1

1.6

1.1

-0.1

-0.1

0.4

0.4

-0.1

-0.1

-0.1

-0.1

8

Crops, n.e.c. (except grains)

-0.1

0.0

-0.1

0.0

0.7

0.7

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

9

Vegetables and fruits

-0.1

-0.1

-0.1

-0.1

0.8

0.8

0.0

0.0

-0.1

-0.1

0.0

-0.1

0.0

0.0

10

Fabricated metals

0.0

0.0

0.0

0.0

-0.4

-0.4

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

11

Beverages and tobacco

0.0

0.0

0.1

0.1

-1.8

-2.1

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

12

Non-ferrous metals

0.0

0.0

0.0

0.0

-0.2

-0.3

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0
0.0

13

Vegetables oils

0.0

0.0

0.0

0.0

-0.5

-0.5

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

14

Paper, pulp, and publishing

0.0

0.0

0.0

0.0

-0.6

-0.6

0.0

0.0

-0.1

-0.1

0.0

0.0

-0.1

0.0

15

Textiles

-0.1

-0.1

0.0

0.0

0.1

0.0

0.0

0.0

-0.2

-0.2

0.0

0.0

-0.1

0.0

16

Dairy products

-0.1

-0.1

-0.1

-0.1

0.3

0.3

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

17

Manufactures, n.e.c.

0.0

0.0

0.0

0.0

-0.2

-0.4

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

18

Meats, except beef

0.0

0.0

0.0

0.0

-0.2

-0.2

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

19

Other transport equipment

0.0

0.0

0.0

0.0

-0.7

-0.8

0.0

0.0

-0.1

-0.1

0.0

0.0

-0.1

0.0

20

Clothing

0.0

0.0

0.0

-0.1

0.1

0.1

-0.1

-0.1

-0.1

-0.1

0.0

0.0

-0.1

0.0

21

Oil, gas, and coal

0.0

0.0

0.0

0.0

0.2

0.3

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

22

Wood products

0.0

0.0

0.0

0.0

-0.5

-0.5

0.0

0.0

-0.1

-0.1

0.0

0.0

-0.1

0.0

23

Other goods

0.0

0.0

0.0

0.0

0.1

0.1

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

119

NL
sectors

SR

SR

0.0

0.0

SR

0.0

US

LR

-0.2

SR

-0.3

JP

LR

0.0

0.0

BRIC

SR

LR

SR

-0.1

-0.1

ROW

LR

0.0

0.0

SR

LR

Utilities

25

Construction

0.0

0.0

0.0

0.0

-0.4

-0.3

0.0

0.0

-0.1

-0.1

0.0

0.0

-0.1

0.0

26

Retail and wholesale trade and warehousing

0.0

0.0

0.0

0.0

-0.4

-0.4

0.0

0.0

-0.1

-0.1

-0.1

0.0

-0.1

-0.1

27

Transport services

0.0

0.0

0.0

0.0

-0.3

-0.3

0.0

0.0

-0.1

-0.1

0.0

0.0

0.0

0.0

28

Communications

0.0

0.0

0.0

0.0

-0.5

-0.6

0.0

0.0

-0.1

-0.1

-0.1

0.0

-0.1

0.0

29

Other financial services

0.0

0.0

0.0

0.0

-0.4

-0.5

0.0

0.0

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

30

Insurance

0.0

0.0

0.0

0.0

-0.4

-0.5

0.0

0.0

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

31

Other business services

0.0

0.0

0.0

0.0

-0.5

-0.5

0.0

0.0

-0.1

-0.1

-0.1

0.0

-0.1

-0.1

32

Recreational and consumer services

0.0

0.0

0.0

0.0

-0.5

-0.6

0.0

0.0

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

33

Other services (public health, education, residential)

0.0

0.0

0.0

0.1

-0.3

-0.4

0.0

0.0

-0.1

-0.1

-0.1

-0.1

-0.1

-0.1

0.0

0.0

LR

SR

Skilled labour employment, % change
N

sectors

EU2

SR

LR

SR

Aus/NZ

US

LR

SR

JP

LR

BRIC

SR

LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

0.1

0.1

0.0

0.0

-0.5

-0.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

2

Other machinery and equipment

0.0

0.1

0.1

0.2

-9.1

-8.0

0.0

-0.1

0.5

0.6

0.0

0.0

-0.2

-0.2

3

Petro-chemicals

0.0

0.0

0.0

0.0

0.5

0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

4

Electrical machinery and equipment

-0.4

-0.2

-0.7

-0.5

8.9

10.7

-0.3

-0.2

0.3

0.4

0.1

0.1

-0.1

-0.1

5

Processed foods, n.e.c.

-0.1

-0.1

-0.1

-0.1

1.1

1.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

6

Iron and steel

0.2

0.3

0.1

0.2

-5.1

-4.3

0.0

0.0

0.0

0.0

0.0

0.0

-0.1

-0.1

7

Motor vehicles

-0.4

-0.4

0.5

0.5

-7.8

-6.5

0.2

0.2

-1.6

-1.7

0.1

0.1

0.2

0.2

8

Crops, n.e.c. (except grains)

0.0

-0.1

-0.1

-0.1

0.8

0.8

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

9

Vegetables and fruits

-0.1

-0.1

-0.2

-0.2

1.5

1.5

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

10

Fabricated metals

0.2

0.2

0.1

0.1

-2.7

-2.3

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

120

Aus/NZ

LR

24

Table 0.15

0.0

EU2
LR

N
sectors

EU2

SR

LR

SR

Aus/NZ

LR

11

Beverages and tobacco

-0.1

-0.1

-0.1

12

Non-ferrous metals

0.0

0.0

13

Vegetables oils

0.0

0.0

14

Paper, pulp, and publishing

0.0

0.0

SR

US

LR

SR

JP

LR

BRIC

SR

LR

SR

ROW

LR

SR

LR

-0.1

1.9

1.6

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

1.0

1.4

0.0

0.0

0.1

0.1

0.0

0.0

-0.1

0.0

0.0

-0.1

0.9

0.8

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

-1.1

-1.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

15

Textiles

0.2

0.2

0.2

0.2

-3.6

-3.3

0.0

0.0

0.5

0.5

-0.1

-0.1

0.1

0.0

16

Dairy products

-2.2

-2.2

-1.9

-1.9

34.7

34.6

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

17

Manufactures, n.e.c.

0.2

0.1

0.0

0.1

-1.5

-1.0

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

18

Meats, except beef

0.2

0.2

-0.1

-0.1

0.7

0.8

0.0

0.0

0.2

0.2

0.0

0.0

0.0

0.0

19

Other transport equipment

0.0

0.0

-0.2

-0.1

1.1

1.4

-0.1

-0.1

0.4

0.4

0.0

0.0

0.1

0.1

20

Clothing

0.1

0.1

0.3

0.3

-6.0

-5.9

0.2

0.1

0.2

0.2

-0.1

-0.1

0.1

0.0

21

Oil, gas, and coal

0.0

0.0

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

22

Wood products

0.0

0.0

0.1

0.1

-1.4

-1.2

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

23

Other goods

-0.2

-0.2

-0.2

-0.2

2.3

2.4

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

24

Utilities

0.0

0.0

0.0

0.0

0.4

0.1

0.0

0.0

0.0

0.1

0.0

0.0

0.0

0.0

25

Construction

0.0

0.0

0.0

0.0

0.4

0.8

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

26

Retail and wholesale trade and warehousing

-0.1

-0.1

0.0

0.0

0.4

0.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

27

Transport services

0.0

0.0

0.0

-0.1

0.7

0.5

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

28

Communications

0.3

0.3

0.1

0.0

-1.1

-1.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

29

Other financial services

0.0

0.0

0.0

0.0

-0.6

-0.7

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

30

Insurance

0.0

0.0

0.0

0.0

-0.7

-0.7

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

31

Other business services

0.0

0.0

0.0

0.0

-0.7

-0.7

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

32

Recreational and consumer services

0.1

0.1

0.0

0.0

-0.1

-0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

33

Other services (public health, education, residential)

0.0

0.0

0.0

0.0

0.3

0.2

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Share of labor force displaced across sectors

0.2

0.2

0.0

0.0

2.8

2.5

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

121

Table 0.16

Unskilled employment, % change
NL

sectors

EU26
LR

SR

Aus/NZ

LR

SR

US

LR

SR

JP

LR

SR

BRIC
LR

SR

ROW

LR

SR

LR

1

Chemicals, rubber, and plastics

0.1

0.1

0.0

0.0

-0.7

-0.7

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

2

Other machinery and equipment

0.1

0.1

0.1

0.2

-9.3

-8.3

-0.1

-0.1

0.5

0.6

0.0

0.0

-0.2

-0.2

3

Petro-chemicals

0.1

0.0

0.0

0.0

0.3

-0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

4

Electrical machinery and equipment

-0.4

-0.2

-0.6

-0.5

8.7

10.3

-0.3

-0.2

0.3

0.4

0.1

0.1

-0.1

-0.1

5

Processed foods, n.e.c.

0.0

0.0

-0.1

-0.1

0.9

0.8

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

6

Iron and steel

0.3

0.4

0.1

0.2

-5.3

-4.5

0.0

0.0

0.0

0.0

0.0

0.0

-0.1

-0.1

7

Motor vehicles

-0.4

-0.4

0.5

0.5

-8.0

-6.7

0.2

0.2

-1.6

-1.7

0.1

0.1

0.2

0.2

8

Crops, n.e.c. (except grains)

0.0

-0.1

-0.1

-0.1

0.8

0.8

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

9

Vegetables and fruits

-0.1

-0.1

-0.2

-0.2

1.4

1.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

10

Fabricated metals

0.2

0.2

0.1

0.2

-2.9

-2.6

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

11

Beverages and tobacco

0.0

-0.1

-0.1

-0.1

1.7

1.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

12

Non-ferrous metals

0.0

0.0

0.0

0.0

0.8

1.0

0.0

0.0

0.1

0.1

0.0

0.0

-0.1

0.0

13

Vegetables oils

0.0

0.0

0.0

-0.1

0.6

0.6

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

14

Paper, pulp, and publishing

0.1

0.0

0.0

0.0

-1.3

-1.4

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

15

Textiles

0.2

0.3

0.2

0.3

-3.9

-3.6

0.0

0.0

0.5

0.5

-0.1

-0.1

0.1

0.0

16

Dairy products

-2.2

-2.2

-1.9

-1.9

34.4

34.3

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

17

Manufactures, n.e.c.

0.2

0.2

0.1

0.1

-1.7

-1.3

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

18

Meats, except beef

0.2

0.2

-0.1

-0.1

0.5

0.5

0.0

0.0

0.2

0.2

0.0

0.0

0.0

0.0

19

Other transport equipment

0.0

0.0

-0.1

-0.1

0.8

1.1

-0.1

-0.1

0.4

0.4

0.0

0.0

0.1

0.1

20

Clothing

0.1

0.1

0.3

0.3

-6.2

-6.2

0.2

0.1

0.2

0.2

-0.1

-0.1

0.1

0.0

21

Oil, gas, and coal

0.0

0.0

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

22

Wood products

0.1

0.1

0.1

0.1

-1.6

-1.5

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

23

Other goods

-0.2

-0.1

-0.2

-0.2

2.2

2.2

0.0

0.0

0.1

0.1

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

122

SR

NL
sectors

SR

EU26
LR

0.0

0.0

SR
0.0

Aus/NZ

LR
0.0

SR

US

LR
0.2

-0.2

SR
0.0

JP

LR
0.0

SR
0.0

BRIC
LR
0.0

SR
0.0

ROW

LR
0.0

SR
0.0

LR

24

Utilities

0.0

25

Construction

0.0

0.0

0.0

0.0

0.2

0.5

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

26

Retail and wholesale trade and warehousing

0.0

0.0

0.0

0.0

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

27

Transport services

0.0

0.0

0.0

0.0

0.4

0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

28

Communications

0.3

0.3

0.1

0.1

-1.3

-1.5

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

29

Other financial services

0.0

0.0

0.0

0.0

-0.8

-1.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

30

Insurance

0.0

0.0

0.0

0.0

-0.9

-1.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

31

Other business services

0.1

0.0

0.0

0.0

-1.0

-1.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

32

Recreational and consumer services

0.1

0.1

0.0

0.0

-0.4

-0.5

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

33

Other services (public health, education, residential)

0.0

0.0

0.0

0.0

0.0

-0.1

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Share of labor force displaced across sectors

0.2

0.2

0.0

0.0

2.8

2.6

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

The impact of Free Trade Agreements in the OECD

123

Annex E
Table 0.17

The baseline
Import trade barriers, percentage
Exports to the Netherlands
US

JP

Aus/NZ

US

JP

Aus/NZ

Chemicals, rubber, and plastics

1.8

2.7

1.2

1.9

1.9

2.5

Other machinery and equipment

1.0

1.8

1.4

0.7

0.0

2.6

Petro-chemicals

2.1

0.4

0.0

2.1

3.5

0.7

Electrical machinery and equipment

0.1

1.6

0.6

0.5

0.0

0.6

Processed foods, n.e.c.

18.6

11.2

11.8

4.3

18.5

2.6

Iron and steel

1.2

0.1

0.2

0.1

0.5

3.1

Motor vehicles

5.7

6.9

4.9

2.2

0.0

5.4

Crops, n.e.c. (except grains)

40.4

3.9

4.1

2.3

0.1

0.0

Vegetables and fruits

2.6

1.9

2.9

2.9

3.2

0.3

Fabricated metals

2.8

2.9

2.8

2.0

0.4

6.0

Beverages and tobacco

12.9

9.4

7.6

0.2

18.8

1.9

Non-ferrous metals

3.4

3.6

2.7

2.1

0.7

3.9

Vegetables oils

12.6

6.7

1.1

3.3

6.7

1.1

Paper, pulp, and publishing

0.0

0.0

0.0

0.0

0.1

2.6

Textiles

6.0

4.8

6.0

5.2

3.2

7.2

Dairy products

29.7

224.3

46.8

28.7

19.2

7.7

Manufactures, n.e.c.

1.4

2.1

1.7

0.3

2.1

2.7

Meats, except beef

31.2

5.1

7.5

2.1

70.9

4.1

Other transport equipment

1.2

5.0

1.6

0.2

0.0

0.9

Clothing

9.8

9.7

6.0

8.0

10.4

19.2

Oil, gas, and coal

0.0

0.0

0.0

0.3

0.0

0.0

The impact of Free Trade Agreements in the OECD

124

Imports from the Netherlands

Exports to the Netherlands

Imports from the Netherlands

US

JP

Aus/NZ

US

JP

Aus/NZ

Wood products

0.8

0.8

1.8

0.7

1.0

4.9

Other goods

2.1

3.4

2.7

2.6

3.3

4.5

*

*

*

*

*

*

1.1

2.5

2.5

2.5

2.5

18.5

Utilities
Construction
Retail and wholesale trade and warehousing

1.1

2.5

2.5

2.5

2.5

18.5

Transport services

2.0

2.0

2.0

2.0

2.0

2.0

Communications

1.1

2.5

22.1

2.5

22.1

56.0

Other financial services

3.3

27.5

7.5

27.5

7.5

30.0

Insurance

5.5

17.5

2.5

17.5

2.5

18.5

Other business services

1.1

3.8

6.3

3.8

6.3

21.0

Recreational and consumer services

1.1

2.5

2.5

2.5

2.5

18.5

*

*

*

*

*

*

Other services (public health, education, residential)
Note 1: tariffs are from GTAP data, based on MacMAPS and WTO applied tariff estimates
Note 2: services barriers are based on gravity estimates (see forthcoming EU-US NTM study).

The impact of Free Trade Agreements in the OECD

125

Table 0.18

GDP in baseline secenario (2020)
GDP (EUR million)

Netherlands

629,865

EU26

13,332,278

United States

13,967,408

Japan

4,748,851

Australia and New Zealand

771,087

Brazil, Russia, India, China

12,897,860

Rest of World

12,220,938

Table 0.19

Export values in baseline scenario (2020)
Exports (EUR million)

Netherlands

4,347,695

United States

1,401,643

Japan

721,662

Australia and New Zealand

178,364

Brazil, Russia, India, China

2,593,728

Rest of World

4,648,066

The impact of Free Trade Agreements in the OECD

126

251,083

EU26

Table 0.20

Share of sectors in total value added in baseline secenario (2020)
Value added share
NL

EU-26

USA

Japan

AusNZ

BRIC

ROW

Chemicals, rubber, and plastics

1.31

2.76

2.25

2.30

1.26

2.63

1.97

Other machinery and equipment

2.28

3.32

3.24

3.40

0.69

5.18

2.26

Petro-chemicals

0.17

0.06

0.05

0.06

0.11

0.31

0.28

Electrical machinery and equipment

0.14

0.50

0.34

1.95

0.13

3.01

1.75

Processed foods, n.e.c.

1.56

1.59

1.01

1.21

1.07

0.77

1.17
0.57

Iron and steel

0.49

0.44

0.35

0.88

0.41

1.56

Motor vehicles

0.57

1.50

0.96

1.96

0.66

1.18

1.42

Crops, n.e.c. (except grains)

2.15

0.63

0.22

0.29

0.24

0.72

0.80

Vegetables and fruits

0.57

0.73

0.39

0.63

1.09

5.36

2.53

Fabricated metals

0.84

1.51

1.01

1.21

0.81

1.16

0.77

Beverages and tobacco

0.47

0.33

0.34

0.67

0.66

0.35

0.59

Non-ferrous metals

0.12

0.27

0.20

0.34

0.22

0.68

0.47

Vegetables oils

0.07

0.08

0.02

0.02

0.06

0.05

0.19

Paper, pulp, and publishing

1.88

1.62

1.52

1.62

1.78

0.85

1.12

Textiles

0.23

0.39

0.27

0.21

0.22

1.30

0.87

Dairy products

0.64

0.44

0.19

0.14

0.39

0.29

0.30

Manufactures, n.e.c.

0.69

0.70

0.27

0.62

0.37

1.30

0.64

Meats, except beef

0.22

0.17

0.17

0.08

0.19

0.08

0.19

Other transport equipment

0.38

0.40

0.78

0.36

0.19

0.81

0.53

Clothing

0.32

0.38

0.04

0.27

0.17

0.97

0.47

Oil, gas, and coal

2.07

0.93

1.77

0.01

5.97

4.95

13.58

Wood products

0.26

0.58

0.87

0.27

0.45

0.54

0.72

Other goods

2.12

3.48

2.20

2.18

8.43

11.73

7.45

Utilities

1.85

1.85

1.78

2.01

2.18

2.08

2.12

Construction

6.39

5.84

7.22

6.86

6.35

9.22

5.69

The impact of Free Trade Agreements in the OECD

127

Value added share
NL

USA

Japan

AusNZ

BRIC

ROW

11.86

13.26

12.88

15.69

13.24

8.22

11.02

Transport services

4.50

4.83

2.89

5.04

4.79

4.06

4.33

Communications

2.45

2.29

2.04

2.35

3.01

1.23

1.93

Other financial services

2.16

2.79

7.42

3.88

3.71

3.06

3.21
0.97

Insurance

1.38

1.00

1.99

1.48

2.08

0.87

Other business services

21.94

20.08

9.92

10.09

10.70

4.96

6.21

Recreational and consumer services

3.06

3.74

3.39

3.35

2.58

2.00

2.26

Other services (public health, education, residential)

24.84

21.53

32.01

28.55

25.78

18.54

21.62

The impact of Free Trade Agreements in the OECD

128

EU-26

Retail and wholesale trade and warehousing

Table 0.21

Share of sectors in total exports in baseline secenario (2020)
Export shares
NL

EU-26

USA

Japan

AusNZ

BRIC

ROW

Chemicals, rubber, and plastics

11.51

14.32

12.39

11.08

2.86

8.26

6.05

Other machinery and equipment

6.30

14.79

13.93

29.58

2.11

13.56

8.28

Petro-chemicals

11.52

1.58

2.55

0.47

0.67

4.05

4.34

Electrical machinery and equipment

1.55

2.85

6.27

10.68

0.26

26.61

9.53

Processed foods, n.e.c.

5.93

2.20

1.77

0.43

2.22

0.73

1.80

Iron and steel

3.05

2.18

0.86

3.06

0.79

3.21

1.90

Motor vehicles

3.50

10.58

7.15

18.99

1.44

3.07

5.11

Crops, n.e.c. (except grains)

4.88

0.54

0.51

0.19

0.52

0.08

0.63

Vegetables and fruits

2.17

0.95

1.48

0.04

2.32

0.10

1.86

Fabricated metals

2.22

2.10

1.33

1.49

0.34

2.78

1.00

Beverages and tobacco

2.62

1.16

0.41

0.12

1.76

0.12

0.40

Non-ferrous metals

0.99

1.41

1.30

1.27

2.67

3.19

2.33

Vegetables oils

0.30

0.23

0.26

0.01

0.06

0.32

0.79

Paper, pulp, and publishing

2.55

2.56

2.03

0.72

0.95

0.73

1.17

Textiles

0.79

1.71

1.15

1.35

0.58

4.04

2.50

Dairy products

1.95

0.67

0.14

0.00

1.64

0.03

0.14

Manufactures, n.e.c.

1.87

1.28

1.25

1.06

0.33

4.27

1.15

Meats, except beef

1.75

0.54

0.63

0.01

0.22

0.22

0.15

Other transport equipment

1.18

2.50

5.12

2.93

0.39

1.49

1.78

Clothing

0.22

1.05

0.32

0.09

0.16

7.55

1.31

Oil, gas, and coal

3.17

0.96

2.00

0.00

20.37

5.71

26.29

Wood products

0.29

1.77

0.78

0.14

0.80

1.44

1.44

Other goods

4.11

7.88

11.12

3.97

38.26

2.79

7.05

Utilities

0.27

0.58

0.26

0.01

0.08

0.21

0.26

Construction

1.05

0.73

0.39

1.61

0.09

0.19

0.25

Retail and wholesale trade and warehousing

1.92

1.99

1.10

2.20

2.89

1.18

2.49

The impact of Free Trade Agreements in the OECD

129

Export shares
NL

USA

Japan

AusNZ

BRIC

ROW

4.26

5.13

4.13

3.37

6.11

1.87

4.20

Communications

1.55

0.72

0.61

0.15

0.63

0.22

0.40

Other financial services

0.40

1.76

1.68

0.60

0.64

0.09

0.42

Insurance

0.53

1.68

1.12

0.31

0.70

0.07

0.46

Other business services

12.61

7.90

5.55

2.29

2.34

1.40

2.86

Recreational and consumer services

0.93

1.60

3.03

0.58

2.16

0.16

0.70

Other services (public health, education, residential)

2.06

2.09

7.36

1.20

2.61

0.23

0.97

The impact of Free Trade Agreements in the OECD

130

EU-26

Transport services