Estimates Of The Trade And Welfare Effects Of Free Trade Agreements

In recent years,the WTO Doha Round negotiation process is slow,and there is difficulty among all the parties to reach a consensus.It has slowed down the development process of world economic globalization.Free trade agreements have emerged due to the flexibility and efficiency of their signing,and become a new driving force for the development of economic globalization in today's world.Countries all over the world have participated in the signing of various free trade agreements,and most countries in the world have been covered by various forms of FTA.China also follows the trend of FTA development in the world.Up to December 2018,China has signed a total of 17 free trade agreements involving 23 countries and regions.In this context,it is of great significance to study the trade and welfare effects of FTA.In this paper,a calculable quantitative international trade model is adopted to estimate the trade and welfare effects of the FTA by using the counterfactual research method and selecting the FTA between China,Japan and Korea as the object of counterfactual research.Firstly,based on the general equilibrium model of Eaton and Kortum(2002),the calculable quantitative international trade model of multi-country and multi-sector is established.Secondly,the parameter of FTA's impact on trade cost is estimated through gravity model regression method using the WIOD bilateral trade data from 2000 to 2014.Finally,taking the FTA between China,Japan and Korea as an example,counterfactual studies are used to estimate the trade and welfare effects of the FTA.The study found that:(1)The influence of FTA on various departments is different.Taking this study as an example,the trade cost of departments such as plastics,automobiles,machinery and other means of transportation is significantly reduced by FTA,while that of departments such as textiles,petroleum and base metals is less affected.(2)No matter from the perspective of trade scale or actual wage level,the departments with higher trade costs affected by FTA perform better than those with lower trade costs affected.(3)FTA can promote the scale of foreign trade of member countries and promote bilateral trade between member countries,while it has a small inhibitory effect on foreign trade of non-member countries.(4)FTA can promote the increase of welfare level of member states,which is negatively correlated with the national scale of member states,resulting in the decline of welfare level of non-member states.Countries with close contacts with member states suffer relatively serious damage,but the extent of damage is much lower than the increase of welfare level of member states.Therefore,this paper believes that FTA has positive trade effects and welfare effects on member states.China should remain firm in its "going global" development strategy,take an active part in the process of world bilateral and multilateral trade liberalization,and adhere to broader and deeper free trade cooperation.At the same time,we should guard against the negative effects of other countries' signing free trade agreements.