1. China – Southasia FTA Additional Impacts WTO China’s WTP Accession Abe &Toku Japan

2. Objectives / Purpose Free Trade Agreement between China/Taiwan vs. Southeast Asia Timing: 2010-2015 Assess the expected impacts on –Textiles and apparels –Other manufacturing –Aggregate GDP and welfare –Directions of capital flows

3. Base Closure and Shocks Closure:qcgds(asia) and qgdp, exogenous Uruguay Round Tariff cuts:1995-2005 shock tms (TRAD_COMM….) ATC Quotas:2005-2010 shock txs (textiles, “CHN_TWN”…)

4. Policy Closure and Schocks Closure:qcgds and qgdp endogenous Policy Schock:2010-2015 Reduction of tariffs in CHN/TWN against SEA Ashock tms (“5 industries”) Reduction of tariffs in SEA against CHN/TWN Ashock tms (“5 industries”)

5. GDP: Cumulative diff. qgdpftbb-fbrr- 2010 ftbb-fbrr- 2015 ftbb-fbrr- 2020 NAmerica-0.04-0.16-0.27 WEurope-0.03-0.10-0.15 Japan-0.04-0.17-0.29 CHN_TWN0.100.440.54 OthNICs-0.12-0.54-0.85 SEA0.583.285.84 SoAsia-0.06-0.20-0.33 ROW-0.06-0.22-0.36

6. Textiles Production China/TWN Southeast Asia

7. Impacts on Sector Production Cumulative Diff. China / TWN qo[*CHN_TW N] ftbb-fbrr-2010ftbb-fbrr-2015ftbb-fbrr-2020 grains-0.24-0.15-0.05 othfood-0.09-0.010.06 extract0.200.851.31 textiles-2.32-2.29-1.83 mnfcs0.661.572.04 services0.310.650.63 CGDS1.972.521.84

8. Impacts on Sector Production Cumulative Diff. SEA qo[*SEA]ftbb-fbrr-2010ftbb-fbrr-2015ftbb-fbrr-2020 grains-0.56-0.78-0.92 othfood-0.91-0.61-0.21 extract-1.430.563.08 textiles8.5712.0317.38 mnfcs0.695.2010.80 services1.865.256.99 CGDS7.8015.4517.36

9. EV to Countries Cumulative diff. CHN_TWNSEA EV23,15916,818 allocative effic.-81218,123 ownership of capital 8,5402,976 change in capital 29,97072,300 foreign payment -14,846-60,043 ToT14,076-1,926 cgds1,354-2,355

10. Capital Flow from and to CHN_TWN and SEA Outflowwqhtinflowwqtf basediffbasediff NAmerica 39.11.858.6-2.1 WEurope 67.10.345.2-1.1 Japan 186.50.6-17.2-2.2 CHN_TWN 328.3-6.5120.610.8 OthNICs 25.25.1290.8-6.2 SEA -27.3-17.8509.524.3 SoAsia 731.9132.9-2.2 ROW -48.61.4244.9-1.5

11. Conclusions 1.FTA will bring about benefits to both regions, in terms of real GDP and EV. 2.Textiles will expand in SEA, partially off- setting the reduction from ATC. 3.The FTA benefits on EV will come from TOT in CHN/TWN, and CNalleffr in SEA. 4.FTA will further increase the benefits of capital inflows for both regions.