The Economic and Environmental Impacts of a Free Trade Area of the Asia-Pacific

The formation of the Free Trade Area of the Asia-Pacific (FTAAP) would not only have a huge economic impact but also a significant environmental impact for Asia-Pacific Economic Cooperation members and the world. Several studies have addressed the economic impact of the FTAAP; however, no studies have examined the impact of the FTAAP on greenhouse gas (GHG) emissions. The purpose of this paper is to answer the following question: Does the FTAAP increase GHG emissions? In answering this question, the potential impact of GHG emissions caused by trade liberalization, assuming the complete removal of all import tariffs among the FTAAP members, was estimated using the Global Trade Analysis Project (GTAP) model, the GTAP CO2 emissions database, and the GTAP non-CO2 emissions database. Under the assumption of the complete removal of all import tariffs among the FTAAP members, our results indicate that the FTAAP is likely to increase the total amount of GHG emissions by the FTAAP members and the world