Agriculture Reference
In-Depth Information
Smulaton results and explanatons
In this section, we present the economic impacts of the EHP during 2004-06
and the full implementation of the ACFTA for other commodities during
2006-10 separately. Some of the economic forces underlying the impacts
are analysed.
The economic impacts of the EHP
The welfare effects of the EHP are presented in Table 13.3, and the
participant countries capture the benefits. The ASEAN+5 countries are
the bggest wnners n terms of the absolute ncrease n socal welfare
(US$56.55 million). Newer ASEAN members are next, with welfare increasing
by US$25.8 million. The newer ASEAN members are, however, the biggest
winners in relative terms. China's welfare increase is modest at US$13.65
million. As for other regions,
10
their total welfare declines by US$77.03
million because of trade diversion effects. As a whole, global welfare rises
by US$18.97 million.
The returns to primary inputs—that is, land, capital and labour—increase
in all the EHP countries. As trade liberalisation through the EHP promotes
production in all countries, the demand for primary factors increases.
Therefore, the price of primary factors rises in the new equilibrium under
the assumption of the fixed supply of primary factors. The price of land
increases by 0.029 per cent in China, by 0.71 per cent in ASEAN+5 and by
1.57 per cent n the newer ASEAN members. As relatvely more unsklled
labour is employed in the agricultural sector, the wage increases of unskilled
labour are greater than for skilled labour in EHP countries. The returns to
prmary factors fall n other regons.
Trade increases in all of the ACFTA signatory countries. As shown in
Table 13.4, total exports and imports increase in China by US$276 million
and US$297 million respectively, by US$121 million and US$83 million in
ASEAN+5 and by US$59 million and US$49 million in new ASEAN member
countries. In aggregate, the EHP increases global exports (or imports) by
US$286 million. Moreover, the exports and imports of the commodities
listed in the EHP increase in all ACFTA signatory countries and their growth
rates are larger than those of other commodtes.
