Global Trade Analysis Project Model Research Articles

Examining the influence of United States tax policies on Chinese new energy sector amidst RCEP tax reductions

ABSTRACT This study examines the impact of U.S. tariffs on Chinese-made products using the Global Trade Analysis Project (GTAP) model, as well as trade friction data between the U.S. and China from 2018 to 2024. We establish scenarios to simulate the macroeconomic and industrial economic impacts of these tariffs on China’s clean energy products and other affected goods. Our findings reveal that U.S. tariffs on Chinese clean energy products do not significantly reduce China’s exports in this sector. However, tariffs on other Chinese products lead to a decline in the GDP of both nations and decrease social welfare. Furthermore, the benefits from the Regional Comprehensive Economic Partnership (RCEP) are shown to mitigate the downward pressure on Chinese trade.

The influence of the Regional Comprehensive Economic Partnership on agricultural value chain participation: insights from a global trade analysis project model simulation

ABSTRACT The Regional Comprehensive Economic Partnership (RCEP) is the world’s largest free trade area, involving several major agricultural countries and significantly impacting international agricultural trade. Although existing studies examine the effect of the RCEP on the total trade value of agricultural products, a notable gap exists concerning its effects on agricultural value chain participation. This study addresses this gap by employing a Global Trade Analysis Project model with a dynamic recursive method for data updates, setting simulation scenarios based on tariff commitments and integrating a global value chain accounting framework. We construct indices for regional and global value chain participation and positions to assess the impact of the RCEP on member countries’ agricultural value chains. Our findings indicate that the RCEP enhances agricultural value chain participation for most member countries and improves the regional agricultural value chain positions of China, South Korea and Australia, while negatively affecting those of other member countries. This study contributes to the literature by providing a value chain perspective, offering strategic insights for member countries to leverage the RCEP for high-quality agricultural economic development and generating broader implications for understanding the effects of similar trade agreements on trade liberalization and value chain participation.

The effect of CHINA RAILWAY Express on alleviating the Red Sea Waterway Crisis: A GTAP model-based study

The effect of CHINA RAILWAY Express on alleviating the Red Sea Waterway Crisis: A GTAP model-based study

Economy-wide impact of a reduction in tobacco use in India

BackgroundPublic policy measures aimed at regulating tobacco use should consider the net gains for the nation, as the tobacco sector contributes to employment and tax revenue while also imposing substantial...

The impact of opening the Arctic Northeast Passage on China's carbon emissions

The impact of opening the Arctic Northeast Passage on China's carbon emissions

Economy-wide Impacts of India–UAE CEPA: A CGE Analysis

The present study investigates the potential trade effects of tariff liberalisation under India–United Arab Emirates (UAE) Comprehensive Economic Partnership Agreement (CEPA) using general equilibrium analysis. The study specifically examines output, employment, exports and welfare effects of India–UAE CEPA in computable general equilibrium (CGE) framework using the Global Trade Analysis Project (GTAP) model and database version 10. The study indicates output gains in manufacturing sector for both countries and an increase in demand for unskilled labour in India. The study argues that the CEPA will result in an increase in global exports of all commodity groups for both India and UAE and a substantial gain in bilateral exports of both countries. The present study suggests that deeper integration through tariff reduction on imports under India–UAE CEPA will be welfare enhancing for both India and UAE. Overall results show that there is a lot of untapped potential to bring the welfare gains for both trading partners. Given the present schedule of tariff reduction of CEPA, a win–win scenario will emerge for both partners in short as well as long run. Finally, the study cautioned about the implications of sensitive list for trade effects and protection from misuse of rules of origin in the CEPA. JEL Codes: F1, F13, F14, F15, F17

Quantification of sectoral impact of COVID-19 on Indian economy: an application of economy-wide accounting framework

PurposeCOVID-19 has affected the economies adversely from all sides. The sudden halt in production has impacted both the supply and demand sides. It calls for analysis to quantify the impact of the reduction in economic activity on the economy-wide variables so that appropriate steps can be taken. This study aims to evaluate the sensitivity of various sectors of the Indian economy to this dual shock.Design/methodology/approachThe eight-sector open economy general equilibrium Global Trade Analysis Project (GTAP) model has been simulated to evaluate the sector-specific effects of a fall in economic activity due to COVID-19. This model uses an economy-wide accounting framework to quantify the impact of a shock on the given equilibrium economy and report the post-simulation new equilibrium values.FindingsThe empirical results state that welfare for the Indian economy falls to the tune of 7.70% due to output shock. Because of demand–supply linkages, it also impacts the inter- and intra-industry flows, demand for factors of production and imports. There is a momentous fall in the demand for factor endowments from all sectors. Among those, the trade-hotel-transport and manufacturing sectors are in the first two positions from the top. The study recommends an immediate revival of the manufacturing and trade-hotel-transport sectors to get the Indian economy back on track.Originality/valueThe present study has modified the existing GTAP model accounting framework through unemployment and output closures to account for the impact of change in sectoral output due to COVID-19 on the level of employment and other macroeconomic variables.

The Impact of Japan’s Discharge of Nuclear-Contaminated Water on Aquaculture Production, Trade, and Food Security in China and Japan

The aquaculture and fisheries sectors play critical roles in promoting a global nutritious and climate-friendly food system. The Japanese government started implementing the discharge of nuclear-contaminated water (NCW) into the Pacific Ocean in August 2023, which was followed by stopping the import of seafood from Japan to ensure the safety of imported food for Chinese citizens. The discharge of NCW into the ocean by Japan will directly harm the marine ecological environment and the global ecosystem due to the importance of China as the largest producer, processor, and exporter of aquatic products (APs). This paper employs the Global Trade Analysis Project (GTAP) model to simulate the future impacts of discharging the NCW under three different scenarios. The results showed that discharging NCW will lead to a global decline in AP production and also has negative repercussions on the macroeconomic landscape. Japan will face the most significant negative impact on its national macroeconomy, e.g., Japan’s GDP, total imports, total exports, household income, and social welfare will decrease by 2.18%, 3.84%, 8.30%, 2.61%, and $130.07 billion; similarly, for China, the decrease will be 0.03%, 1.21%, 0.08%, and $728.15 billion, respectively. If China’s AP consumption decreases by 10% and 20%, it will result in protein deficits of 1.536 million tons and 3.132 million tons, respectively. Japan’s deficit will reach 138,000 tons and 276,000 tons. This necessitates supplementation via the consumption of other protein-rich foods, posing a significant threat to the nutritional security of food in both China and Japan.

Economic consequences of climate change impacts on South Asian agriculture: A computable general equilibrium analysis

AbstractSouth Asia is one of the most vulnerable regions of the globe in terms of climate change, with agriculture the most affected economic sector of the region. This study employs an environmental Global Trade Analysis Project model to simulate the impact of an average global 2°C temperature increase by 2050, with a focus on South Asian countries. The economic costs of climate change in relation to crop productivity losses due to increasing temperature, land productivity losses caused by rising sea levels and heat stress‐induced agricultural labour productivity losses are assessed based on model simulations. The results show that the unfavourable climate change impacts on agricultural productivity (crop, land and labour) will reduce food production and create upward pressure on food prices. This will lead to a reduction in food consumption at the household level, threatening future food security in the region. The results further predict a contraction in all South Asian economies by 2050, due to adverse climate change impacts on the agricultural sector. In addition, out of the three climate change damage factors considered, labour productivity causes the greatest economic losses, while land productivity losses caused by rising sea levels impact the least. The study also found that low‐income countries would suffer most severely due to the impacts of climate change on the agricultural sector, while high‐income countries would be impacted the least.

Friction or cooperation? Boosting the global economy and fighting climate change in the post-pandemic era

In the post-COVID-19 pandemic era, the world faces a choice between trade protection and cooperation. However, current literature provides very little information on the benefit or loss of trade friction or cooperation on global economy and climate mitigation. This study applied the Global Trade Analysis Project model to assess the impacts of trade friction on global economic recovery and climate change. The results indicated that international trade friction can both delay global economic recovery and affect CO2 emission reduction. The shocks of consumption reduction and production suspension have a higher marginal effect in developing and emerging economies, whereas trade friction has a higher effect on developed countries. Trade friction has more negative economic effects for developed countries, but developing countries cannot reduce CO2 emissions proportionally with the decrease in trade and related production. In the post-pandemic era, if the global trade barrier increases, the world may face a co-occurring economic decline and an increase in or low abatement of carbon emissions.

The Relative Importance of Global Agricultural Subsidies and Tariffs, Revisited

AbstractOver the past three decades, tariff protection to farmers has fallen and partly been replaced by domestic support, whilst support for farmers in some emerging economies has grown. Against that backdrop, this paper provides new estimates of national economic impacts of global agricultural tariffs and domestic supports. Using the latest global economy-wide GTAP (Global Trade Analysis Project) model calibrated to 2017, we simulate (a) the removal of food and agricultural domestic supports and agri-food tariffs and (b) the removal also of tariffs on imports of non-agricultural goods. We find that agricultural support policies are still an important part of the global welfare cost of all goods’ trade-restrictive policies (albeit only half as costly as in 2001), and tariffs still dominate the global welfare cost of all farm-support programs. That farm support could be re-instrumented to relieve natural resource and environmental stresses, boost food and nutrition security, and alleviate poverty and income inequality.

Economic and environmental impacts of agricultural non-tariff measures: evidence based on ad valorem equivalent estimates

Non-tariff measures as hidden barriers to agricultural trade would not only result in production and welfare distortions due to the international relocation of activities along the agricultural value chain, but also yield subsequent consequences to both the scale and distribution of carbon emissions from the agri-food system. This paper estimates ad valorem equivalents of non-tariff measures using a gravity model in combination with detailed bilateral trade data of 2001-2019, and incorporates the estimations in the Global Trade Analysis Project model and a multi-regional input-output table of Eora26 to quantify economic and environmental impacts of non-tariff measures. We show that while tariff equivalents are on average positive for all types of non-tariff measures, there are substantial heterogeneities across countries and products. The extra trade barriers imposed by these measures would increase the scale of domestic agriculture-related sectors for most agriculture importing countries, and vice versa for major exporters. Meanwhile, they would reduce the global welfare at amount of 16 millions US dollars on average and in particular, the welfare of key imposers and targeting markets of non-tariff measures. Carbon emissions from the agri-food system tend to increase about 1% around the world, especially due to the larger food processing industry in developed countries. Our paper confirms that non-tariff measures lead to both welfare distortions and carbon emissions in the agri-food system. It thus calls for urgent needs to promote further reforms of the agricultural trade regime and the policy coordination across countries to facilitate agri-food system transformation with more integration and sustainability.

A Korea-Kenya Free Trade Agreement and Its Economic Impact: A Computable General Equilibrium Approach

Purpose – This study assesses the impact of a potential Korea-Kenya FTA on the global economy, which includes the US, EU, UK, China, and Japan, using the Global Trade Analysis Project (GTAP) model. Design/Methodology/Approach – The study employs a static global multi-sector CGE model using the GTAP database version 10 with the base year of 2014. For this study, we aggregate the 141 regions and 65 sectors of the GTAP database into 16 regions and 57 sectors. Four policy simulations were implemented based on tariffs and ad valorem equivalents (AVEs) of non-tariff measures (NTMs) estimated by Kitetu and Ko Jong-Hwan (2021). Findings – Simulation results suggest that the real GDP of Korea will likely increase by 0.001% to 0.002%, with welfare increasing by US$1.8 million to US$74.7 million. In comparison, the real GDP of Kenya will likely rise by 0.003% to 0.045%, while welfare will rise by US$1.8 million to US$ 75.3 million. Imports by both countries will rise at a higher rate than exports. For Kenya, domestic output increases in agriculture, extraction, and service sectors, and for Korea, output goes up in processed food and light and heavy manufacturing sectors. Research Implications – The novelty of this paper is in the first empirical quantification of the economic impact of a Korea-Kenya FTA on not only its members but also its trading partners, such as the US, EU, UK, China, and Japan. Moreover, this study provides a comprehensive overview of the impact of a potential FTA between Korea and Kenya by reducing and eliminating tariffs and AVEs of NTMs.

Impact of the tariff concessions of the RCEP agreement on the structure and evolution mechanism of manufacturing trade networks

Impact of the tariff concessions of the RCEP agreement on the structure and evolution mechanism of manufacturing trade networks

Assessing the Impact of the Recent Unprecedented World Events on the Economic and Environmental Conditions of Saudi Arabia

This study quantitatively analyses the impacts that recent unprecedent events have had on the Saudi economy and environment using the Global Trade Analysis Project (GTAP) model. These events include: the global outbreak of COVID-19 and the associated disruption to the global supply chain, the alarming rate of climate change, and various political conflicts. These events have affected global food and energy prices. The results of this study revealed a decline in Saudi GDP, household income, purchase ability, and welfare. A trade deficit was indicated in the Saudi trade balance because of higher food prices and a reduction in two of the main Saudi exports (oil and petroleum products). A decrease in the output of most Saudi industries was shown, despite the increase in exports for most sectors. This was because of the reduction in Saudi households’ domestic consumption. Regarding the environmental impact, the Input–Output Life Cycle Assessment (IO-LCA) approach was used to estimate the total CO2 emissions of the Saudi economy. In total, approximately 740.6 million metric tons of CO2 emissions were estimated. By using a recently published specific carbon intensity for Saudi oil, total Saudi CO2 emissions were 24.59% less than the non-specific measure.

Analyzing the potential market for MSMEs in India

This paper summarizes the arguments and counterarguments within the scientific discussion on identifying the potential markets for Micro Small and Medium Enterprises (MSMEs). The main purpose of the research is to present the commodities and potential destinations that Indian MSMEs can tap on to broaden their business and eventually to the overall growth of the country. Systematization of the literary sources as a part of the study indicates that MSMEs have made a significant contribution to the country’s GDP and trade. A survey of the approaches for solving the objective of the research reveals that trade indices and CGE models are the most appropriate when it comes to trade policy analysis. The relevance of this scientific problem decision is that Indian MSME’s contribute to more than 30% of India’s GDP and enhancing MSME exports would help the country achieve an inclusive, socio-economic growth. Investigation of the topic in the paper is carried out in the following logical sequence: We first analyze the commodities that have a potential for growth and then move ahead to analyze the promising markets. To perform quantitative analysis, we use trade indices and estimations from Computable General Equilibrium -GTAP (Global Trade Analysis Project) model. To analyze potential commodities, we use Product Space Analysis with three indicators, namely, the Revealed Comparative Advantage (RCA), Revealed Trade Advantage (RTA), and Market Demand Index. To analyze the potential markets, we use the Export potential indicator and GTAP estimates for the years 2022-27. The object of the research is to empower MSMEs in India with insights and data about the potential markets and commodities for export from India. The paper shows that MSMEs have a higher potential for exports in textiles and clothing, food products, vegetables, and other agricultural products, and machinery and electrical equipment sectors. In terms of markets, our analysis reveals that MSMEs have a broad scope in the UAE, China, Bangladesh, and the USA.

New Price-based Bilateral Ad-valorem Equivalent Estimates of Non-tariff Measures

As global applied tariffs continue to decline, and the stock of non-tariff measures continues to increase, applied international trade researchers increasingly seek to evaluate the effects of non-tariff measure (NTM) policies. This, however, requires their quantification – a non-trivial estimation task that needs to be undertaken at a disaggregated level. Estimation of ad-valorem-equivalents (AVEs) of NTMs is generally conducted using one of two approaches: price-based or quantity-based. This study uses a price-based approach to estimate AVEs at the Harmonised System (HS) six-digit level. Bilateral Global Trade Analysis Project (GTAP) sector-specific AVEs are obtained by aggregating the derived AVE estimates, using HS-GTAP sector concordance and HS six-digit level bilateral trade flows as weights. A key advantage of the price-based estimation method used in this study is that the AVEs can be directly used in the GTAP model, without the need to adjust them based on import-demand elasticities. Derived AVEs estimated in this study are also importer/partner-specific and rely on counts of NTMs rather than simply instances of NTMs. This paper provides GTAP-consistent estimates and aggregation code to facilitate custom GTAP aggregations of AVEs, as well as replicable, open source code that can be altered based on users' assumptions or particular research needs.

How Will the Global Food Landscape Accommodate Developing Countries' Dietary Change under Urbanization?

There has been a growing awareness of the dietary shift from traditional staples to animal-derived foods during the urbanization of developing countries. Less discussed is how the global food landscape will accommodate such changes in diet. Our study aims to use the GTAP (Global Trade Analysis Project) model to predict the future food landscape based on the dietary shift in developing countries, represented by China, India, Bangladesh, and Myanmar, under a 2030 urbanization scenario. The results show that the average global outputs of fish, meat, and dairy products increase by 0.26-2.85%, along with an expansion in their trade volume by 2.10-13.95%, by 2030. To ensure that dietary changes can be met in developing countries, Asia and America need to strengthen their positions with respect to global food production share, while Africa is developing to become a non-negligible growing force. Accordingly, globalized food trade is characterized by a centralized export and, conversely, by a decentralized import, clearly indicating an expanding net-import tendency in populous developing countries. These findings highlight the adaptation scheme of global food production and trade patterns under a 2030 urbanization scenario, as urbanization accelerates dietary change in developing countries.

The effect of agricultural technology transfer on Zimbabwe’s economic development: a dynamic global trade analysis project approach

ABSTRACT Since 2000, Zimbabwe’s agricultural output has fluctuated despite the transfer of agricultural technology by various organisations and international partners. The low output response to technology transfer is attributed to the twin problems of lack of access and adoption of technology, which are largely explained by weak institutions, financial constraints, skill and knowledge deficiency, and poor rural infrastructure. The aim of this study was therefore to assess the effect of agricultural technology transfer on economic development using a dynamic Global Trade Analysis Project model for the reference year 2011. The study results indicated that economic performance improves when quality fertilisers, certified seeds, and machinery from other countries are used more intensively. Thus, policy interventions are required that enhance credit extension, roads, capital equipment, and good institutions such as property rights that incentivise farmers to adopt and invest in technology.

China's integration in the Asia-Pacific regional economic cooperation.

China is actively deepening integration into economic cooperation in the Asia-Pacific region. The Regional Comprehensive Economic Partnership Agreement (RCEP) has come into force and China is one of its members. Furthermore, China is applying to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This study uses the Global Trade Analysis Project (GTAP) model to measure the impact of the RCEP and CPTPP on Gross Domestic Production (GDP), import, export, terms of trade, and social welfare of major economies under various scenarios, as well as the competitive effects and complementarity of the RCEP and CPTPP. We found that the CPTPP with China’s accession and the RCEP will complement and strengthen each other and that the members of the two agreements can obtain substantial benefits. If China and the United States join the CPTPP, China’s import growth rate will be higher than its exports. This would transmit growth to other nations and help bridge the trade gap between China and the United States.