The relative significance of EPAs in Asia-Pacific

- TPP and RCEP are shown to complement each other rather than be competitors.
- Trade diversion effects will deteriorate the welfare of non-member economies of EPAs.
- Larger economic benefits are expected from NTMs reduction in addition to tariff cut.
- China will generate the largest income gains of APEC economies as a whole from FTAAP.
- ASEAN countries and others will primarily benefit from their own EPA policy measures.

This paper analyzes the relative significance of regional Economic Partnership Agreements (EPAs) in Asia-Pacific. The economy-wide impacts of tariff removals and reductions in non-tariff measures (NTMs) are estimated by using a Computable General Equilibrium (CGE) model of global trade. The Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) are shown to complement each other rather than be competitors. The income gains of Asia-Pacific Economic Cooperation (APEC) economies as a whole account for 1.2% of regional GDP by the TPP, 2.1% by the RCEP, and 4.3% by the Free Trade Area of the Asia-Pacific (FTAAP). Meanwhile, larger economic benefits are expected from NTMs reductions in addition to tariff removals. It is thus essential to reform domestic markets in order to enjoy greater economic benefits from international EPAs.