The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment

by Peter Petri, Michael Plummer, Fan Zhai

Overview

While global trade negotiations remain stalled, two tracks of trade negotiations in the Asia-Pacific—the proposed Trans-Pacific Partnership (TPP) agreement and a parallel Asian track—could generate momentum for renewed liberalization and provide pathways to region-wide free trade. This book investigates what these trade negotiations could mean to the world economy. Petri, Plummer, and Zhai estimate that world income would rise by $295 billion per year on the TPP track, by $766 billion if both tracks are successful, and by $1.9 trillion if the tracks ultimately combine to yield region-wide free trade. They find that the tracks are competitive initially but their strategic implications appear to be constructive: the agreements would generate incentives for enlargement and mutual progress and, over time, for region-wide consolidation. The authors conclude that the crucial importance of Asia-Pacific integration argues for an early conclusion of the TPP negotiations, but without jeopardizing the prospects for region-wide or even global agreements based on it in the future.

Product Details

ISBN-13:	9780881326642
Publisher:	Peterson Institute for International Economics
Publication date:	06/15/2012
Series:	Policy Analyses in International Economics , #98
Pages:	143
Product dimensions:	6.00(w) x 9.00(h) x (d)
Age Range:	18 Years

About the Author

Peter A. Petri, visiting fellow at the Peterson Institute for International Economics, is the Carl J. Shapiro Professor of International Finance in the International Business School of Brandeis University and a senior fellow of the East-West Center. From 1994 to 2006, he served as the founding dean of the International Business School. He has held appointments as visiting scholar or professor at the Organization for Economic Cooperation and Development (OECD), Keio University, and Fudan University, and as Fulbright Research Scholar and Brookings Policy Fellow. He has consulted for the Asian Development Bank, the Asian Development Bank Institute, the World Bank, the OECD, the United Nations, and the governments of the United States and other countries. He is active in US-Asia affairs and is a member of the Board of the US Asia Pacific Council, the International Advisory Group of the Pacific Economic Cooperation Council (PECC) Trade Policy Forum, and the International Steering Committee of the Pacific Trade and Development Conference Series (PAFTAD).

Michael G. Plummer is the Eni Professor of International Economics at Johns Hopkins University, SAIS Bologna. He is also editor-in-chief of the Journal of Asian Economics and (nonresident) senior fellow at the East-West Center. He was head of the Development Division of the Organization for Economic Cooperation and Development (2010-12), the associate professor of economics at Brandeis University, and director of its MA programs at the International Business School. He was also a Fulbright Chair in Economics; Pew Fellow in International Affairs, Harvard University; research professor at Kobe University; and visiting fellow at ISEAS, the University of Auckland, and Doshisha University. Plummer has worked on numerous projects for international organizations, development and other government agencies, and regional development banks, including the Asian Development Bank (ADB), the Association for Southeast Nations (ASEAN) Secretariat, and the ADB Institute.

Fan Zhai is managing director and head of the asset allocation and strategy research department of the China Investment Corporation (CIC). He is responsible for overall asset allocation strategy and portfolio management of CIC's overseas investment. He also oversees macroeconomic research and market analysis to support strategic asset allocation and tactical investment views. Before he joined CIC in November 2009, he was research fellow at the Asian Development Bank in Manila. He has also worked at the Ministry of Finance and the Development research Center of the State Council in China.

Table of Contents

Preface ix

Foreword xiii

1 Introduction 1

2 How and Why the Trans-Pacific Partnership Became a Priority 5

Historical Roots 5

Objectives of the TPP 8

Geopolitics 10

Competing Templates 11

The Emerging TPP Template 14

3 Analytical Approach 23

The Model 23

Baseline Projections 25

Scenarios of Trade Agreements 26

Simulating the Effects of Trade Agreements 29

4 Economic Implications of the Trans-Pacific and Asian Tracks 35

Income Effects 36

Trade and Investment Effects 43

Structural Change 46

Employment Effects 57

Impact on Nonmembers 60

5 Dynamics of the Trans-Pacific and Asian Tracks 63

Trans-Pacific Track 64

Asian Track 64

Pathways to Regionwide Agreements 67

Who Will Lead? 71

6 National Economic Interests 73

United States 73

China 77

Japan 80

Other Economies 81

7 Conclusion 85

Appendix A The Computable General Equilibrium Model 91

Appendix B Baseline Projections 95

Appendix C Scoring Provisions in Asia-Pacific Agreements 107

Appendix D Quantifying the Trade Effects of Agreements 111

Appendix E Quantifying the Investment Effects of Agreements 121

Appendix F Model Sensitivity 127

References 133

Abbreviations 137

Index 139

Tables

2.1 Asia-Pacific trade agreements 7

2.2 The Trans-Pacific Partnership as a 21st century agreement 15

3.1 Summary of scenarios 29

3.2 Assumptions about prospective agreements 32

4.1 Income gains under alternative scenarios 41