Effects of tariff reduction by regional comprehensive economic partnership (RCEP) on global value chains based on simulation

ABSTRACT

We estimate the effects of tariff reduction by regional comprehensive economic partnership (RCEP) on global value chains based on simulation. We find that tariff reduction by RCEP has an effect of strengthening signatories’ GVC positions and participation both in the short run and long run. The long-run effects are larger than the short-run effects. Australia, New Zealand, ASEAN countries and Japan have a potential to move towards the top of GVCs in sectors with comparative advantages in the long run. Overall, Korea’s GVC positions improve more than Japan and China, and both Korea and Japan benefit more in GVC participation than China in the long run. In contrast, USA and Europe’s GVC positions and participation tend to slightly drop.

KEYWORDS:

• RCEP
• global value chain
• global value chain position
• global value chain participation

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ China Briefing, May 26, 2021, “Trading Opportunities Available Under the RCEP” by Zoey Zhang, https://www.china-briefing.com/news/rcep-trading-opportunities-available-plurilateral-fta-beneficial-provisions/.

² See Corong et al. (2017) for a complete documentation for version 7 of the standard GTAP model.

³ Government of Canada’s website, About tariff elimination under the CPTPP, https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/tariff-elimination-droits_de_douane.aspx?lang=eng.

⁴ International Trade Center’s Trade Map https://www.trademap.org/Index.aspx.

Additional information

Funding

This work was supported by the Humanities and Social Science Research Foundation of the Ministry of Education of China [18YJC790206]; LiaoNing Revitalization Talents Program [XLYC1907192].