1、MODELLING THE POTENTIAL BENEFITS OF AN AUSTRALIACHINA FREE TRADE AGREEMENTMODELLING THE POTENTIAL BENEFITS OF AN AUSTRALIA-CHINA FREE TRADE AGREEMENTDr Yinhua MAICentre of Policy Studies, Monash UniversityProfessor Philip ADAMSCentre of Policy Studies, Monash UniversityDr Mingtai FANChinese Academy
2、of Social SciencesProfessor Ronglin LINankai UniversityDr Zhaoyang ZHENGNankai UniversityAn Independent Report Prepared for:The Australia-China FTA Feasibility Study2 March 2005The Centre of Policy StudiesCentre of Policy StudiesBuilding 11EMonash UniversityClayton, Victoria 3800AustraliaWeb address
3、: http:/www.monash.edu.au/policy/ABN No 12 377 614 012Contact persons at the Centre of Policy Studies: Dr Yinhua MAI Professor Philip ADAMSSenior Research Fellow DirectorTel: 61-3-99055482 Tel: 61-3-99055094Fax: 61-3-99052426 Fax: 61-3-9952426yinhua.maibuseco.monash.edu.au philip.adamsbuseco.monash.
4、edu.auContacts in China Dr Mingtai FAN Professor Ronglin LI Institute of Quan. & Tech. Economics Institute of international Economics Chinese Academy of Social Sciences Nankai University5 Jianguomennei Street Beijing 100732 China 94 Weijin Road, Tianjin, 300071, China Tel: 86-10-65125895 Tel: 86-22-
5、23505235 Fax: 86-10-65137561 Fax: 86-22-23502437 mtfan lronglin Acronyms and InitialsCGE Computable General EquilibriumCoPS Centre of Policy StudiesDFAT Department of Foreign Affairs and Trade, AustraliaFTA Free Trade AgreementGDP Gross Domestic ProductGNE Gross National ExpenditureGNP Gross Nationa
6、l ProductGTAP Global Trade Analysis ProjectMMC Monash Multi-CountryMOFCOM Ministry of Commerce, Peoples Republic of Chinanec not elsewhere classifiedROW Rest Of the WorldWTO World Trade Organisation Table of ContentsExecutive summary iii1. Introduction 12. Growing economic partnership between Austra
7、lia and China 32.1 Chinas demand for Australian agricultural and mineral products 32.2 Two-way trade in manufacturing products 42.3 Cooperation in the services sector 42.4 Deepening partnership in the future 53. Trade and investment barriers between Australia and China 63.1 Border protection on merc
8、handise trade 73.2 Restrictions on investment flows 103.2.1 Australias foreign investment regime 103.2.2 Chinas foreign investment regime 103.3 Restrictions on trade in services 114. Removing border protection on merchandise imports 134.1 GDP and Volumes of Trade 134.2 Real wages and Employment in t
9、he Long-run 144.3 Welfare effects and the Terms of Trade 154.4 Industry output 164.5 Industry employment 175. Facilitating bilateral investment flows 186. Service trade liberalisation 217. Aggregate effects of Australia-China FTA 237.1 Macroeconomic impacts 237.2 Industry impacts 247.3 Labour market
10、 adjustment 257.3.1 Australia Wearing apparel 257.3.2 Australia motor vehicles and parts 267.3.3 China Agriculture 267.3.4 China - mining 267.3.5 China - services 278. Faster versus slower liberalisation 279. Impact on Rest of the World 2810. Concluding remarks 28References 30Appendix A. The modelli
11、ng framework MMC 32Overview: Economic agents and the nature of the markets 33CGE Core: Demands for inputs to be used in the production of commodities 33CGE Core: Household demands 34CGE Core: Inputs to investment 34CGE Core: Governments demands for commodities 34CGE Core: International trade 34CGE C
12、ore: Factor markets 35CGE Core: Physical capital accumulation 35Model closure 35Solution software 36Executive summary1. In 2002 Australia and China established a Trade and Economic Framework to enhance bilateral trade and investment. Under the framework, a joint feasibility study of a possible Austr
13、alia-China Free Trade Agreement (FTA) is being conducted. 2. The Centre of Policy Studies was commissioned by the Australian Department of Foreign Affairs and Trade to conduct modelling analysis on the potential benefits of an Australia-China FTA. The study was undertaken jointly with experts from t
14、he Chinese Academy of Social Sciences and Nankai University.3. In this study we simulate three aspects of an FTA: removal of border protection on merchandise trade, investment liberalisation, and removal of barriers to services trade. The analytical framework is a multi-country, multi-sector computa
15、ble general equilibrium model, the Monash-Multi-Country model. In our simulation we assume that the implementation of policy changes under the FTA commences in 2006.4. In simulating the impacts of policy changes under an FTA, we first simulate a business-as-usual scenario (or baseline). The baseline
16、 describes the evolution of the Australian and Chinese economies in the absence of an Australia-China FTA. The effects of the policy changes under the FTA are reported as changes relative to baseline levels. 5. From our modelling we conclude that for both Australia and China the FTA yields increased
17、 output and is welfare enhancing. The FTA is estimated to boost the present value (see Figure 7.1 on page 42) of real Gross Domestic Product (GDP) and real Gross National Product (GNP) between 2006 and 2015 as follows: Australia real GDP, US$18 billion; China real GDP, US$64 billion; Australia real
18、GNP, US$22 billion; and China real GNP, US$52 billion.6. In terms of average annual growth rates between 2005 and 2015, the FTA is estimated to increase Australias real-GDP growth by 0.039 percentage points; and increase Chinas real-GDP growth by 0.042 percentage points.7. Real GDP increases in both
19、 countries due to increased capital, improved productivity and better utilisation of resources. A key factor underlying the increase in Australias real GNP is an improved terms of trade.8. The FTA enhances the economic partnership between Australia and China by increasing bilateral trade and investm
20、ent flows. It is also trade creating for the world as a whole. The volume of world imports increases from its baseline level as a result of the Australia-China FTA.9. In achieving a better utilisation of resources, adjustment of labour between sectors does occur, largely due to the removal of border
21、 protection on merchandise trade. However, due to the complementarities of the two countries, such reallocation of labour between sectors tends to facilitate the natural course of adjustment already occurring in the two countries. Furthermore, such adjustment is small in scale compared with what is
22、occurring in the two countries amid globalisation without an FTA. 10. The Australian industries that benefit most from the FTA are cereal grains, wool, wool tops, minerals, and non-ferrous metals. The Chinese industries that benefit most from the FTA are manufacturing industries, especially textiles
23、, wearing apparel, and miscellaneous manufactures (toys and sporting goods etc). Services sector in both countries benefit from the FTA.11. If the policy changes are implemented gradually between 2006 and 2010, the long-run effects of the FTA in 2015 are similar to those from full implementation in
24、2006. However, faster implementation leads to earlier delivery of the gains for both countries. As a result, the present values of gains in real GDP and real GNP are smaller with slower implementation.1. IntroductionThe Centre of Policy Studies (CoPS) was commissioned by the Department of Foreign Af
25、fairs and Trade (DFAT) to conduct a model-based study into the economic impacts of a Free Trade Agreement (FTA) between Australia and China. The study was undertaken jointly with experts from Chinese Academy of Social Sciences and Nankai University.The study is based on simulations undertaken with t
26、he MONASH Multi-Country Model (MMC) of Australia, China and the Rest Of the World (ROW) developed at CoPS. MMC features: Dynamic mechanisms that allow the time-path of effects of a shock, such as the implementation of an FTA, to be analysed over a number of years; An industry structure (see Table 1.
27、1) that allows the industrial impacts of an FTA to be analysed in considerable detail; A realistic baseline consistent with the views of expert forecasters such as the World Bank and the International Monetary Fund. Specific accounting for trade flows between countries that allows for the simulation
28、 of removing border protection on bilateral imports; and Specific accounting for bilateral investment flows that allows for the simulation of investment liberalisation, as well as the liberalisation of services trade of the commercial-presence type (defined in Box 1.1 below).Box 1.1 Four modes of tr
29、ade in services According to the World Trade Organisation (WTO), trade in services has four modes: cross-border supply services supplied from one country to another (e.g. international telephone calls); consumption abroad consumers from one country making use of a service in another country (e.g. to
30、urism); commercial presence a company from one country setting up subsidiaries or branches to provide services in another country (e.g. a bank from one country setting up operations in another country); and movement of natural persons individuals travelling from their own country to supply services
31、in another (e.g. an actress or construction worker).In this report the explanation of results are presented in a non-technical manner so as to be readily comprehensible to readers unfamiliar with the MMC model. A brief technical description of the model is given in Appendix A.The modelling covers simulations of the following three aspects of trade liberalisation under an FTA: the removal of existing barriers (tariff and non-tariff) to trade in goods between Australia and China; the liberalisation of investment flows between Australia and China; and trade liberalization in serv
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