BEYOND THE URUGUAY ROUND - THE IMPLICATIONS OF AN ASIAN FREE-TRADE AREA

At the 1994 APEC meetings in Bogor, members made a commitment to form an APEC free trade area (FTA) by 2020. Using a multi-country, computab le general equilibrium (CGE) model, this paper explores the impact of such an arrangement on Pacific Rim economies. An APEC FTA yields gains in GDP for all APEC countries, with larger gains for the developing c ountries which benefit more from the increased trade. There are advant ages in making the FTA as broad as possible: omitting any one region ( US, China, or ASEAN4) makes that region significantly worse off, and l owers the gains for all other members as well. The Asian NIEs have the most to gain from broad FTA membership-exclusion of China reduces Asi an NIE gains by about half. Global trade liberalization including the EU and rest of world along with APEC is the most favorable outcome - w ith each APEC country gaining more from global liberalization than it does from joining an APEC FTA alone.