The Economics of Conflict and Cooperation in the Asia-Pacific: RCEP, CPTPP and the US-China Trade War

40 Pages Posted: 7 Oct 2021

See all articles by Cyn-Young Park

Cyn-Young Park

Asian Development Bank

Peter A. Petri

Brandeis University - Brandeis International Business School; Brookings Institution; Brandeis University - Department of Economics

Michael G. Plummer

Johns Hopkins University

Date Written: September 30, 2021

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.

Keywords: Computable General Equilibrium, Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Free Trade Agreement, Regional Comprehensive Economic Partnership, Rules of Origin

JEL Classification: F13, F15, F17

Suggested Citation

Park, Cyn-Young and Petri, Peter A. and Plummer, Michael G., The Economics of Conflict and Cooperation in the Asia-Pacific: RCEP, CPTPP and the US-China Trade War (September 30, 2021). East Asian Economic Review Vol. 25 No. 3 (September 2021) 233-272, https://dx.doi.org/10.11644/KIEP.EAER.2021.25.3.397, Available at SSRN: https://ssrn.com/abstract=3937722

Cyn-Young Park

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines
(632) 632-5473 (Phone)

HOME PAGE: http://www.adb.org

Peter A. Petri

Brandeis University - Brandeis International Business School ( email )

Mailstop 32
Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

Brandeis University - Department of Economics

Waltham, MA 02454-9110
United States

HOME PAGE: http://ppetri.com/

Michael G. Plummer (Contact Author)

Johns Hopkins University ( email )

Via Belmeloro 11
40126 Bologna
Italy

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