Multilateral, Regional and Bilateral Trade-Policy Options for the United States and Japan

26 Pages Posted: 11 Jul 2003

See all articles by Drusilla K. Brown

Drusilla K. Brown

Tufts University - Department of Economics

Alan V. Deardorff

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; University of Michigan at Ann Arbor - Department of Economics

Robert M. Stern

University of Michigan at Ann Arbor - Department of Economics

Abstract

We have used the Michigan Model of World Production and Trade to simulate the economic effects on the United States, Japan, and other major trading countries/regions of the Doha Round of WTO multilateral trade negotiations and a variety of regional/bilateral free trade agreements (FTAs) involving the United States and Japan. We estimate that an assumed reduction of post-Uruguay Round tariffs and other barriers on agricultural and industrial products and services by 33 per cent in the Doha Round would increase world welfare by $686.4 billion, with gains of $164.0 billion for the United States, $132.6 billion for Japan, and significant gains for all other industrialised and developing countries/regions. If there were global free trade with all post-Uruguay Round trade barriers completely removed, world welfare would increase by $2.1 trillion, with gains of $497.0 billion (5.5 per cent of GNP) for the United States and $401.9 billion (6.2 per cent of GNP) for Japan. Regional agreements such as an APEC FTA, an ASEAN Plus 3 FTA, and a Western Hemisphere FTA would increase global and member country welfare but much less so than the Doha multilateral trade round would. Separate bilateral FTAs involving Japan with Singapore, Mexico, Chile and Korea, and the United States with Chile, Singapore and Korea would have positive, though generally small, welfare effects on the partner countries, but potentially disruptive sectoral employment shifts in some countries. There would be trade diversion and detrimental welfare effects on some non-member countries for both the regional and bilateral FTAs analysed. The welfare gains from multilateral trade liberalisation are therefore considerably greater than the gains from preferential trading arrangements and more uniformly positive for all countries.

Suggested Citation

Brown, Drusilla K. and Deardorff, Alan V. and Stern, Robert M., Multilateral, Regional and Bilateral Trade-Policy Options for the United States and Japan. Available at SSRN: https://ssrn.com/abstract=423343

Drusilla K. Brown (Contact Author)

Tufts University - Department of Economics ( email )

Medford, MA 02155
United States
617-627-3096 (Phone)
617-627-3917 (Fax)

Alan V. Deardorff

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

735 South State Street, Weill Hall
Ann Arbor, MI 48109
United States

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
458 Lorch Hall
Ann Arbor, MI 48109-1220
United States
313-764-6817 (Phone)
313-764-2769 (Fax)

Robert M. Stern

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
313-764-2373 (Phone)
313-763-9181 (Fax)

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