The dynamic effects of the CPTPP and new member accessions

Abstract

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) means the start of new preferential trade relationships and the consolidation of existing agreements into a single multilateral agreement, with the aim of achieving greater liberalization in both intensive and extensive margins of trade. A structural dynamic gravity model of trade is used to evaluate the potential effects of the CPTPP on both static and dynamic equilibria. The results from the latter are almost twice as large as those from the former. With China as a member of the agreement, other CPTPP members experience larger welfare gains. The economies that benefit most are those of Southeast Asia that belong to ASEAN (Malaysia, Vietnam and Singapore), while Uruguay stands out because of the significant trade liberalization that its membership would entail. A methodology is proposed for analyzing changes in welfare. This methodology enables the ranking of the contributions of different markets and the distinction between intensive and extensive margins.