Poverty impacts of preferential trading arrangement (PTA) and most favored nation (MFN) treatment on the Philippines: A computable general equilibrium (CGE) analysis

The Philippines, a samll developing economy in SOutheast Asia, has been actively participating in preferential and mutilateral trading arrangements since the 1990s. However, its potential poverty impacts are not yet fully known. This paper, using a top-down representattive household computabe general equilibrium (CGE) model, finds that the decrease in both most-favored nation (MFN) and common effective preferential tariff (CEPT) rates between 200 and 2006 lowers national poverty, albeit marginally.Across household groups, the relatively poor and unskilled workers, i.e., agricultural and industrial workers, benefit the most from preferential and multilateral libralization. This is primarily due to a relatively large fall in consumer prices. In this regard, this paper proposes that the Philippine government strictly abide by its preferential and multilateral trade commitments in order to reap the economic rewards from trade liberalization, and most importantly, reduce poverty