What Might be a Desirable FTA Path towards Global Free Trade for Asia-Pacific Countries?

In response to the lack of progress and the subsequent suspension of negotiations in the Doha Round, a number of Asia-Pacific countries have accelerated bilateral and regional trade initiatives. While global free trade is the ultimate goal, many countries strive not to be left out of the recent wave of free-trade agreements (FTAs). Indeed, all major Asia-Pacific countries are currently negotiating bilateral and/or regional FTAs. Is there a preferred FTA sequencing that would eventually lead to global free trade? Although there are a number of studies on sequencing of real and monetary integration, studies on desirable sequencing of FTAs are extremely scarce. The objective of this paper is to investigate what might be a desirable path of FTAs for countries in the Asia-Pacific using a dynamic computable general equilibrium (CGE) model. In particular, we shed light on the relationship between sequencing of FTAs and the extent of structural adjustments. The preliminary results suggest that the combination of the Trans-Pacific track sequencing (moving from TPP12 to enlarged TPP and FTAAP) and Regional Comprehensive Economic Partnership (RCEP) would move the industrial structure within each member country closer to that which would prevail under global free trade, while increasing economic welfare of the member countries.