Liberating Middle Earth: how will changes in the global trading system affect New Zealand?

Trade liberalisation has gained momentum in recent decades due to the increased popularity of free trade areas and the continued progress of multilateral liberalisation via the World Trade Organisation (WTO). We analyse how likely changes in the global trading environment will influence New Zealand – a small, relatively open economy with a comparative advantage in the world’s most protected sector – using a computable general equilibrium (CGE) model of global production and trade. We find that most bilateral free trade agreements have a small but positive impact on New Zealand welfare and multilateral trade liberalisation generates significant benefits for New Zealand.UnpublishedAndriamananjara, D. and M. Tsigas, 2004. Free trade agreements with the United States: What can we learn from 65 simulations? U.S. International Trade Commission, Washington, D.C., June 5. Armington, P. S., 1969. A theory of demand for products distinguished by place of production. IMF Staff Papers, 16, 159-76. Beghin, J. C., D. Roland-Holst, and D. van der Mensbrugghe, 2002. Global agricultural trade and the Doha round: What are the implications for North and South? Working Paper 02-WP 308, CARD, Iowa State University, June. Bouet, A., J-C., Bureau, Y. Decreux, and S. Jean, 2004. Multilateral agricultural trade liberalisation: The contrasting fortunes of developing countries in the Doha round. CEPII Working Paper 04-18. Brown, D., 1987. Tariffs, the terms of trade, and national product differentiation. Journal of Policy Modeling, 9(3), 503-26. Brown, D., K., Kiyota, R. M. Stern, 2005. Computational analysis of the U.S. FTAs with Central America, Australia, and Morocco. The World Economy, forthcoming. Bushfisher M., S. Robinson and J. Thierfelder, 2002. The global impact of farm policy reforms in OECD countries. American Journal of Agricultural Economics, 84(3), 768-74. Centre for International Economics, 2001. Economic impacts of an Australia-United States free trade area. Canberra and Sydney: Centre for International Economics. Dimaranan, B. V. and R. A. McDougall, 2002. Global Trade, Assistance, and Production: The GTAP 5 Data Base. Center for Global Trade Analysis, Purdue University. Hertel, T., 2002. Introduction to the GTAP Data Base. In: B. V. Dimaranan and R. A. McDougall, eds. Global trade assistance and protection: The GTAP 5 data base. Purdue University, Center for Global Trade Analysis: Chapter 1. Hertel, T., D. Hummels, M. Ivanic, and R. Keeney, 2004. How Confident can we be in CGE-Based assessments of free trade agreements? NBER Working Paper 10477. Ministry of Foreign Affairs and Trade, 2004. A joint study on a free trade agreement between China and New Zealand. Wellington: Ministry of Foreign Affairs and Trade. Rutherford, T. F., and S. V. Paltsev, 2000. GTAPinGAMS and GTAP-EG: Global datasets for economic research and illustrative models. University of Colorado. Scollay, R., and J. Gilbert, 2001. New regional trading agreements in the Asia Pacific? Washington DC: Institute for International Economics. Shakur, S., A. Rae, and S. Chatterjee, 2004. A road ahead from Cancun? Weighing up some give-and-take scenarios in a DDA spirit. Discussion Paper 04.10, Department of Applied and International Economics, Massey University. Winchester, N., and M. Richardson, 2003. ANZUS free trade agreements: results from a global model. Economics Discussion Paper 0303, University of Otago