Inkyo Cheong

Comparing the Economic Impact of the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership

Several initiatives have emerged for regional economic integration in the Asia-Pacific region. The United States has led the negotiations for the Trans-Pacific Partnership agreement, and ASEAN countries have recently started to promote the Regional Comprehensive Economic Partnership. This paper estimates the net economic impact of these initiatives by eliminating the overlapping portions of free trade agreement–related economic gains through the use of a dynamic computable general equilibrium model. The paper analyzes the economic and political feasibility of these two initiatives and assesses their economic impacts. Finally, the paper provides implications for economic integration in East Asia based on a quantitative assessment.

Negotiations for the Trans-Pacific Partnership Agreement: Evaluation and Implications for East Asian Regionalism

The Trans-Pacific Partnership (TPP) agreement seems to have reached a crossroads: it could either be a building block toward achieving economic integration in Asia and the Pacific, or trigger the formation of two large trade blocs which will work independently of one another. When the Government of Japan announced its participation in the TPP negotiations in March 2013, the partnership began to attract greater interest from other East Asian countries. This paper analyzes the progress and major issues regarding the current TPP negotiations which are being led by the United States, and draws implications for East Asian economic integration.

Estimation of Economic Effects of FTAs in East Asia — CGE Approach

Despite political and social barriers, there is much to be gained from an East Asian FTA. Factors such as geographic proximity, complementary endowments of production factors, and growing economic ties after the crisis will help in making this goal come true. East Asia accounts for one-third of the world’s population and one-fifth of the world’s GDP and trade volume. In terms of population and GDP, excluding the inflow of the FDI, East Asia is evaluated to have a similar economic potential as the EU and NAFTA. What benefits could an East Asian FTA offer member economies? As East Asia becomes a free market with the elimination of tariffs and non-tariff barriers, businesses will be able to expand exports and enjoy economies of scale. Moreover, the creation of a huge free market will bring dynamic benefits since the region will attract more foreign direct investment, which will subsequently create more jobs and facilitate the transfer of advanced technology. Other forms of dynamic benefits also exist. First of all, common standards for production technology, product regulations, distribution, and after-sales service can be expanded across countries in the region. Even if these standards are in conflict with the standards of North America or the EU, the Asian countries can gain leverage during international standardizing negotiations by presenting a unified front, as suggested in Igawa and Kim (2001). The rapid emergence of China in discussions on Northeast Asian or East Asian economic cooperation is also a matter for consideration as East Asian countries need to strengthen cooperation with China. With China’s admission into the WTO and its hosting of the Olympics in 2008, its economic and political position will improve. An East Asian FTA offers a way to effectively access the Chinese market and at the same time strengthen economic cooperation with China. Some have proposed the restructuring of East Asia’s development model after the financial crisis. So far, East Asian countries have achieved economic growth through increased exports to the U.S. market. However, since the U.S. demand for

A SEARCH FOR CLOSER ECONOMIC RELATIONS IN EAST ASIA

In recent years, growing interdependence in East Asia through trade and financial cooperation heightened the need for East Asian Economies to engage in closer regional economic relations. This paper attempts to discuss emerging economic integration efforts in East Asia with special reference to bilateral and regional free trade agreements. It discusses backgrounds for recent developments of East Asian regionalism in terms of deepening intraregional economic dependence and financial cooperation, and South Koreas position towards FTAs with major trading partners as well as East Asian economic integration. Important issues and challenges for an East Asian FTA are presented.

The impact of Korea's FTA network on seaborne logistics

Few studies have examined Free Trade Agreements (FTAs) in the context of logistics, reflecting a lack of hybrid studies involving trade economists and logistics researchers. This paper attempts to examine the impact of Koreas FTAs on the flow of international trade, the volume of seaborne trade, and the creation of additional demand for logistics services for port and containerized cargoes. The implementation of Koreas FTAs is expected to increase port and containerized cargoes, an additional 90 million tons and an additional 893 095 TEUs in the long run. Although the demand for seaborne logistics is expected to increase, the impacts are likely to vary widely across sectors and FTAs. Increased imports of agricultural and chemical/rubber/plastic products are likely to be the most important contributor to the creation of additional demand for seaborne logistics. This paper tries to draw implications for the logistics industry and the port authority.

The challenges of developing a competitive logistics industry in ASEAN countries

The objective of this paper is to assess the challenges facing the Association of Southeast Asian Nations (ASEAN) countries in their effort to develop a competitive logistics industry in light of an ASEAN Economic Community by 2015. In particular, it tries to evaluate the extent to which the measures adopted to improve the competitiveness of their respective logistics industries have been implemented and identify the underlying factors affecting their implementation. The methodology used relies on questionnaire-based interviews with a sample of logistics firms and relevant government agencies in the ASEAN countries. Overall, the extent of implementation has been low and characterised by a significant perception gap between logistics firms and their respective governments. These findings imply the need for the ASEAN countries to further undertake specific actions targeting the underlying causes. Unless these factors are addressed, they are likely to hinder the achievement of a competitive logistics industry and thus the realisation of establishing a regionally integrated market. Addressing this issue is not only relevant to ASEAN but can also provide some valuable insights for other developing countries.

ASEAN's initiatives for regional economic integration and the implications for maritime logistics reforms

Purpose – The purpose of this paper is to estimate the economic impact of reducing logistics cost on the demand for port throughput in the context of Association of Southeast Asian Nations’ (ASEAN) regional economic integration and to realize the potential economic gains of the maritime logistics reform in the region. Design/methodology/approach – The main part of this paper is to formulate conversion coefficients for containerized cargo to estimate the impacts of logistics reform on the demand for port throughput. These conversion coefficients, then have been used into a dynamic computational general equilibrium model using Global Trade Analysis Project database to explore the impact of logistics cost. Findings – The study demonstrates that logistics efficiency is a challenge for ASEAN economic integration, providing significant implications for maritime logistics reforms. Research limitations/implications – This study assumes uniform improvements of 5 and 10 percent in the logistics sector for all count...

The economic impact of a rise in US trade protectionism on East Asia

The purpose of this paper is to evaluate the economic impact of a rising US trade protectionism on the economies of China, Japan, South Korea and the ASEAN countries and draw out some policy and strategic implications for the USA and East Asia.,The authors employ a computable general equilibrium approach supplemented with qualitative analyses based on empirical evidence.,An increase in US import tariffs would result in economic losses for the USA and the corresponding country or region to which the import tariff increase is applied. An increase in US import tariffs for Chinese goods alone would not have any spillover effects on other East Asian countries. But, an imposition of a border adjustment tax (BAT) for all countries and for all products would actually boost US economic growth. Advanced economies would enjoy GDP increases, but China, Korea and the ASEAN countries would face an economic loss in a longer term period, although they would enjoy some growth in the short term. However, when the BAT only applies to a specific East Asian country, USA would suffer an economic loss, with the exception of a BAT specifically targeted at the ASEAN countries. ASEAN countries would not experience any economic loss under all scenarios except in the case of import tariffs specifically targeted at ASEAN.,From the US perspective, it is beneficial to adopt a BAT for all countries and across the board. Under this arrangement, there would be an economic loss for China, Korea and the ASEAN countries in the longer term. An increase in US trade protectionism would only push the East Asian countries towards deeper economic integration, with serious implications for global pattern of trade and investment.,The existing literature on the likely economic impact of US trade protectionism on East Asia is very scarce and based on surveys and subjective speculations. This study uses a quantitative method based on empirical evidence.

Regional contents in exports by major trading blocs in the Asia-Pacific region

Purpose The purpose of this paper is to calculate regional contents in the exports of the major regional blocs to the world, Trans-Pacific Strategic Economic Partnership (TPP), and Regional Comprehensive Economic Partnership (RCEP), respectively, to find the backward trade linkages between them instead of normal forward linkages. Design/methodology/approach To calculate “a region” content in intermediate and value-added exports, this paper uses OECD’s inter-country input-output table (ICIOT), and tries to decompose the contents of trade. Using the information of ICIOT, Koopman et al. (2014) and Wang et al. (2013) decompose gross exports of a country’s exports. Findings TPP is a loosely tied bloc featured by openness to the Asia-Pacific region. Trade linkages between members are stronger in RCEP than those in TPP, particularly in the trade of intermediate goods. Trades in RCEP are closely connected to exports to TPP, but the opposite direction is not clear. Research limitations/implications First of all, the recent base year of the data on value added in trade is 2011, which can be regarded as a little bit out of date. Therefore, it should be cautious in interpreting the results in that it may not reflect the characteristics of current trade. Second, this paper uses ICOIT instead of world input-output table. Practical implications A large portion of trades in RCEP and TPP is triggered by a global production network (fragmentation, vertical specialization), different from traditional trade focusing on inter-industry trade or competition between countries. Thus, the formation of TPP or RCEP is predicted to stimulate trade of the other instead of discriminating nonmember countries. Social implications In particular, the authors have special concern in the backward linkages between RCEP and TPP, the distinct characteristics of the two regional blocs and, finally, major countries’ preferences of the one over the other and industrial conflicts toward TPP or RCEP even in an economy. Originality/value Although this paper uses the approach by Baldwin and Lopez-Gonzalez, this paper is the first research on the analysis of the export contents in major trading blocs in the Asia-Pacific region.

The ASEAN-Korea Trade In Services (AKTIS) Agreement: Its Impact on Indonesia and Other ASEAN Countries

To strengthen trade in services between ASEAN and Korea, in 2009 both sides signed and implemented the ASEAN–Korea Trade in Services (AKTIS) agreement. This article is the first to assess the trade implications of this agreement for Indonesia and other ASEAN countries. Despite the increasing volume of ASEAN–Korea trade in services since 2009, it is hard to say whether AKTIS was the only factor behind this encouraging growth. The agreement’s potential trade impact is, however, quite substantial. Given the importance of enhancing further trade in services between the ASEAN countries and Korea, we propose a number of specific liberalisation measures that Indonesia and other ASEAN countries could take to further strengthen such trade with their Asian neighbour.