Agriculture Reference
In-Depth Information
WTO commtments) and trade lberalsaton n ASEAN (ASEAN free trade
commtments). The second s that we have separated and explored the
different effects of the two-stage implementation of the ACFTA. The
following are the key findings of the study.
All member countries will gain from the ACFTA: it will increase social
welfare and promote real GDP in the EHP phase from 2004-06 and in the fuller
implementation during 2006-10. As the EHP includes only a small package
of agricultural commodities, the gains during the fuller implementation of
the ACFTA will be much larger in all member countries.
There is a large trade creation effect among the ACFTA signatories;
their total exports will increase. A trade diversion effect is, however,
also apparent. Trade between ACFTA signatories and other regions can
be expected to declne due to the creaton of the agreement. Because
the trade creation effect is much larger than the trade diversion effect,
global trade will be increased by the ACFTA, especially in the fuller
mplementaton stage of the agreement.
The ACFTA will bring about substantial structural changes in China and
n ASEAN countres. Trade lberalsaton wll mprove the explotaton of
comparative advantages in ACFTA signatories. The structural changes will
take place n the agrcultural and ndustral sectors. Our results also show
that the dfferent polcy arrangements stemmng from the two-stage trade
lberalsaton wll have dfferent mpacts on the shfts n economc structure
durng the process of mplementaton.
The rest of the world wll have to face the challenges brought about
by the ACFTA. Because the agreement will enhance the competitiveness
of China and ASEAN in each other's markets, exports from non-member
countres wll be substtuted. Socal welfare and real GDP wll declne n
the non-member countries as a result of the creation of the ACFTA.
The results provide some useful insights into the impacts of the ACFTA
on trade and economic relations between China and ASEAN; however, some
limitations of the exercise should be mentioned. First, as many studies
have observed, there are serious disguised unemployment problems in
agricultural sectors. This reality is not modelled. Therefore, instead of the
increases in wages the ACFTA gives rise to in the simulations, it is more
likely that the ACFTA will create job opportunities. If we take this factor
into account, China's gain from the agreement could be much larger and the
