East Asian Economic Review

Korea Institute for International Economic Policy (대외경제정책연구원)
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The Economics of Conflict and Cooperation in the Asia-Pacific: RCEP, CPTPP and the US-China Trade War

  • Park, Cyn-Young (Asian Development Bank) ;
  • Petri, Peter A. (IBS, Brandeis University, and Brookings Institution) ;
  • Plummer, Michael G. (SAIS Europe, Johns Hopkins University, and East-West Center)
  • Received : 2021.07.16
  • Accepted : 2021.09.27
  • Published : 2021.09.30
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Abstract

The Regional Comprehensive Economic Partnership (RCEP) agreement, signed in November 2020, comes shortly after the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force and the US-China Trade War escalated. We use a computable general equilibrium model to assess the long-term effects of these three developments on income, trade, economic structure, factor returns and employment across the world, and especially in Asia-Pacific countries. The results suggest that RCEP could generate income gains that will be almost twice as large as those of the CPTPP, and that the two agreements together will largely offset the substantial negative effects of the US-China Trade War for the world as a whole. All three policy developments, but especially RCEP, will deepen East Asian production networks and will raise productivity and increase wages and employment in much of East Asia. At the sectoral level, regional trade in non-durable and durable manufactures will experience the most growth.

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References

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