Indo-Pacific cooperation: What do trade simulations indicate?

Rahman, Mohammad Masudur; Kim, Chanwahn; De, Prabir Article Indo-Pacific cooperation: What do trade simulations indicate? Journal of Economic Structures Provided in Cooperation with: Pan-Pacific Association of Input-Output Studies (PAPAIOS) Suggested Citation: Rahman, Mohammad Masudur; Kim, Chanwahn; De, Prabir (2020) : Indo-Pacific cooperation: What do trade simulations indicate?, Journal of Economic Structures, ISSN 2193-2409, Springer, Heidelberg, Vol. 9, Iss. 45, pp. 1-17, https://doi.org/10.1186/s40008-020-00222-4 This Version is available at: https://hdl.handle.net/10419/261592 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Indo‑Pacific cooperation: what dotrade simulations indicate? Mohammad Masudur Rahman1* , Chanwahn Kim2 and Prabir De3 1 Introduction The regional dynamics in the Asia–Pacific region are changing rapidly. China’s “Belt and Road Initiative” has gained enormous attention. The USA has withdrawn from the Trans-Pacific Partnership (TPP) Agreement and TPP11, which is now called Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and has been signed on 8 March 2018 in Chile. The Regional Comprehensive Partnership (RCEP)1 has also gained momentum recently. The trilateral free trade agreement (FTA) between China, Japan, and South Korea, the USA and the EU free trade agreement (FTA) (Transatlantic Trade and Investment Partnership—TTIP),2 and other regional trade agreements have been emerging due to the deadlock of the WTO’s Doha Round. Against this backdrop, a new regional bloc called ‘Indo-Pacific’ has gained high prominence. Originally, this regional cooperation was aimed to foster a quadrilateral alliance (also known as Quad) between Abstract This paper investigates the potential economic effect of ‘Indo-Pacific’ regional economic cooperation and compares with the extended CPTPP. The Computable General Equilibrium (CGE) results show that the quadrilateral alliance between the United States, Japan, Australia, and India shows although a substantial economic gain whilst South and East Asia join with the Indo-Pacific cooperation, the economic benefit would be enormous. The findings also indicate that South and East Asian improved trade facilitation could bring huge gain as a large part of Indo-Pacific trade has remained unrealized. The trade transaction cost is one of the major trading barriers prohibiting the growth of Indo-Pacific intra-regional trade. The study reinforces that improvement in infrastructure and connectivity that leads to less trade transportation costs should be a necessary step to realise Indo-Pacific trade potential. Keywords: Indo-Pacific, Trade, Regional integration, Trade facilitation, CGE JEL Classification: F14, F15, F17 Open Access © The Author(s) 2020. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creat iveco mmons .org/licen ses/by/4.0/. RESEARCH Rahmanetal. Economic Structures (2020) 9:45 https://doi.org/10.1186/s40008‑020‑00222‑4 *Correspondence: [email protected] 1 Dept. of Economics, School of Accounting, Finance and Economics (SAFE), The University of Waikato, Hamilton, New Zealand Full list of author information is available at the end of the article 1 The Regional Comprehensive Economic Partnership (RCEP) has developed amongst 16 countries: the 10 members of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and the six countries with which ASEAN has existing FTAs—Australia, China, India, Japan, Korea, and New Zealand. RCEP is a significant step in the evolution of trade policy frameworks in East Asia over the past decade. Total population of the region is over 3 billion people and a trade share estimated at around 29% of global trade, covering GDP of about US$ 23 trillion (World Bank 2018b). 2 The USA and the EU reaffirmed their commitment to conclude expeditiously a comprehensive and ambitious Transatlantic Trade and Investment Partnership (TTIP) that already accounts for nearly half of global output (EU 2017). Page 2 of 17 Rahmanetal. Economic Structures (2020) 9:45 the United States, Japan, Australia, and India. However, several South, Southeast, East Asian and Pacific Island economies including Vietnam, New Zealand, Bangladesh, Sri Lanka and some of the Indian Ocean Rim (IOR) countries have shown interests in joining the Indo-Pacific group. The attributes of the Indo-Pacific are quite appealing. The region comprises at least 38 countries that share 44% of world surface area and 65% of world population, and account for 62% of world-GDP and 46% of the world’s merchandise trade (Table1). However, the region faces complex challenges in terms of economy, security and the environment.3 Most of the Indo-Pacific studies however talk about maritime strategic and geopolitical aspects of the region. David (2012), for example, explores the political and maritime strategic discourse of the Indo-Pacific concept and tries to explore the maritime challenges that are being faced by India in the Indian Ocean and by the USA in the Pacific Ocean. He also discusses the different strategic pathways to meet the challenges. USAID (2015) attempts to inspect the trade relationship link of India with the Southeast and East Asian countries in the context of the Indo-Pacific. Mohan (2017) discusses the relevance of the Indo-Pacific alliance briefly, whilst Singh (2017) attempts to explore the maritime security under the Indo-Pacific context. De (2018), on the other, identifies scope for deepening Indo-Pacific cooperation in connectivity. Scott (2019) evaluates Indonesia’s grappling with the Indo-Pacific andconcludes that whilst Indonesia certainly is on the rise as an Indo-Pacific actor, its continuing naval weakness undermines Indonesia’s “maritime nexus” stance suggesting a closer synergy for Indonesia with the US and Japanese Free and Open Indo-Pacific initiative is suggested. Although most of the literature has argued that the Indo-Pacific cooperation is simply an emerging idea, which is yet to take a formal shape of regional cooperation bloc. The Computable General Equilibrium (CGE)-based welfare analysis is one of the growing areas for economic analysis of different regional integration including TPP, TTIP, RCEP, and many other free trade agreements. Within the Global Trade Analysis Project (GTAP)- based studies, most assume fixed factor supplies and variable factor prices. Gilbert etal. (2018) provide a detailed synthesis of CGE literature and discuss the economic impact of TPP. Kawasaki (2017) and Whittaker etal. (2013) allow for capital accumulation effects. Several papers modify the underlying theory of GTAP. USITC (2016) introduces an elastic labour supply, whilst Akgul etal. (2015) present firm heterogeneity in an exciting proof of Table 1 Indo-Pacific’s share intheWorld, 2017. Source: Authors’ calculation based on WDI (2018a), World Bank Indicators Share inWorld (%) Surface area 44 Population 65 Economic size (GDP, current US$) 62 Economic size (GDP, PPP $ term) 66 Merchandise trade 46 3 Refer, for example, Chandra and Ghosal (2018). Page 3 of 17 Rahmanetal. Economic Structures (2020) 9:45 concept. Rahman and Ara (2015), Strutt etal. (2015) and Petri and Plummer (2016) attempt to quantify the impact of TPP, TTIP and RCEP on different regions. Cheong and Tongzon (2013) analyse the economic effects of TTP and RCEP and argue that the TPP should be extended for its economic benefit to all Asian countries, including the China. Rollo etal. (2014) evaluate some of the potential effects of TTIP economic integration on low-income countries. Berden etal. (2009) calculate the effects of tariff and NTMs reduction of the proposed TTIP and find that EU GDP may be 0.7% higher whilst the USA GDP could increase by 0.3% per year starting 2018 compared to the baseline scenario. Ciuriak etal. (2016) use a modified version of the GTAP model with recursive dynamics model. The approach is similar to that of the GTAP-Dyn model described in Ianchovichina and McDougall (2001) and utilised in several studies (Cheong and Tongzon 2013; Lee and Itakura 2013). In other innovations, Li and Whalley (2014) employ an Armingtontype model. Roh and Oh (2016) also introduce firm heterogeneity. Strutt etal. (2015) estimate the potential economic of TPP on New Zealand economy using GTAP-Dyn and find that the welfare gains to New Zealand ranging from US$ 371 million (tariffs only) to US$ 1.8 billion (tariffs plus NTMs). The above brief review shows that various aspects of TPP, CPTPP, TTIP, and RCEP have been analysed using CGE. However, there is no single research to quantify the impact on Indo-Pacific regional economic cooperation. It would, therefore, be interesting to see the implications of the Indo-Pacific trade deal. With the above background, the objective of this paper is to make a comparative analysis of likely impact of tariff reduction and trade facilitation under the Indo-Pacific regional integration on various macro- and trade variables. The main aim of the study is to explore different free trade agreements under the canopy of the Indo-Pacific framework. We simulate reductions of tariff and improved trade facilitation in CGE models. This study has the potential to provide profound insights into the currently active policy debate on the regional mega deal. Rest of the paper is arranged as follows. Followed by Introduction in Sect.1, methodology is briefed in Sect.2. Section3 presents the results and conclusions are drawn in Sect.4. 2 Methodology andstructure ofGTAP model The most common modelling technique for estimating economic impacts of a trade agreement with economy-wide effects involves the CGE modelling framework of GTAP. The CGE model and GTAP structure are presented in Hertel (1997).4 The basic structure of the GTAP database includes industrial sectors, households, governments, and global sectors across countries. Countries and regions in the world economy are linked together through trade. Prices and quantities are simultaneously determined in both factor markets and commodity markets. The main factors of production are skilled and unskilled labour, capital, natural resources and land (Hertel 1997). Producers operate under constant returns to scale, where the technology is described by the Leontief and CES functions. Two broad categories of inputs are identified: intermediate inputs and primary factors of productions. In the model, firms minimise costs of inputs given their level of output and fixed technology. First, producers use composite units of 4 Refer Hertel (1997) for a full introduction to the database. Page 4 of 17 Rahmanetal. Economic Structures (2020) 9:45 intermediate inputs and primary factors in fixed proportions following a Leontief production function. At the second level of the production nest, intermediate input composites are obtained combining imported bundles and domestic goods of the same input–output group. Trade policy including NTMs can affect the price of traded goods relative to domestically produced goods. As a result, a key relationship for model analysis is the degree of substitution between imported and domestic goods. This key relationship is commonly identified as the Armington elasticity.5 It is assumed that domestically produced goods and imports are imperfectly substituted. Households’ behaviour in the model is determined from an aggregate utility function. The aggregate utility is modelled using a Cobb–Douglas utility function with constant expenditure shares. This utility function includes private consumption, government consumption and savings. Current government expenditure goes into the regional household utility function as a proxy for government provision of public goods and services. Private households’ consumption is explained by a constant difference elasticity expenditure function. Domestic support, tariff and NTMs are modelled as ad valorem equivalents. These policies have a direct impact on the production and consumption sectors in the model. The simulation represents what the economy would look like if the policy change or shock had occurred. The difference in the values of the endogenous variables in the baseline and the simulation represents the effect of the policy change. So, the model should be able to provide the effect on trade and production patterns if the trade policy was changed. This study uses data from GTAP version 9,6 which has the base year of 2011. Version 9 of the GTAP database covers 57 commodities, 140 regions/countries and eight factors of production. The GTAP framework has strength because of theoretical rigour, its ability to represent direct and indirect interactions amongst all sectors of an economy and precise detailed quantitative results. The strength of the multi-country CGE model is that it incorporates elegantly the features of neoclassical general equilibrium and real international trade models in an empirical framework (Thierfelder etal. 2007). The model’s results may be very sensitive to the assumptions and data used. 2.1 Assumptions ofGTAP model The main assumption of standard GTAP model is a single regional household with an aggregated utility function. This allocates the regional expenditure across three components that is private expenditure, the government expenditure and savings (Hertel 1997). The model assumes that the regional household sell its endowment commodities to the domestic firms and earn income. The aggregate utility is modelled using a Cobb– Douglas utility function with constant expenditure shares. The firms, in turn, combine these endowment commodities with intermediate commodities and produce goods for final demand. Producers operate under constant returns to scale, where the technology is described by the Leontief and CES functions. It is assumed that domestically produced goods and imports are imperfectly substituted. The one is a global bank that 5 The constant elasticity of substitution (CES) specification for the trade substitution elasticity is derived from Armington (1969). 6 Recently GTAP Version 10 has been released. Page 5 of 17 Rahmanetal. Economic Structures (2020) 9:45 works as intermediary between global savings and regional investment. The other sector is the trade accounts’ and transports’ activities. The global bank creates a composite investment good and then supplies this to the regional households to satisfy their saving demands based on a common price for all the savers. 2.2 Closures Model closure statements define which variables are endogenous and which are exogenous. The standard GTAP closure has considered for this analysis. Hertel and Tsigas (1997) and Burfisher (2016) discuss the detailed structure of GTAP closure and how to modify the closure for a particular analysis. To modify the model’s standard closure statement, it requires to swap an exogenous variables for an endogenous variable. In this study, we assume that there is perfect competition in all sectors. Production factors, i.e., capital and labour, are assumed to be fully mobile between sectors, whereas land and natural resources are treated as sluggish to move (Burfisher 2016). Fixed balance of trade, that is, for a country, allows domestic savings to adjust to maintain a fixed ratio between trade balance and national income. Government spending is assumed as a constant share of government income. The expected rate of return drives investment as in the standard GTAP model, and total domestic savings is by the sum of private household savings and government budget. Hence, the trade balance is endogenous. The global bank in the GTAP model uses receipts from the sale of a homogeneous savings commodity to the individual regional households to purchase shares in a portfolio of regional investment goods. The size of this portfolio adjusts to accommodate changes in global savings. Therefore, the global closure in this model is neoclassical (Hertel 1997). 2.3 The GTAP model formacroeconomic analysis7 The bilateral import tariffs amongst these countries are presented in Table2. Bilateral average applied import tariffs of Australia and the USA are much lower compared to others. However, Australia imposes comparatively higher tariffs when importing from Japan and India, especially on food grains and processed foods. Japan’s import duties on Australia and the USA are also lower, but Japan maintains higher tariffs when importing from India. The USA maintains high tariffs importing from both Japan and India. It is surprising that Indian average applied tariffs on imports from Australia, Japan, and the USA are relatively low, compared to its trade partners. As mentioned earlier, we use Version 9 of the GTAP database. Data on regions and commodities are aggregated to meet the objectives of this study. The Version 9 of the GTAP database covers 57 commodities, 140 regions/countries and eight factors of production. For the sake of convenience, the 140 regions have been aggregated into 15 regions whereas the 57 sectors have been aggregated into 10 sectors as shown in Appendix. 7 Refer Hertel (1997) for a full introduction to the database, available at https ://www.gtap.ageco n.purdu e.edu. Page 6 of 17 Rahmanetal. Economic Structures (2020) 9:45 Table 2 Bilateral average applied import tariff rate for2011. Source: GTAP version 9 Australia’s import tariff on Japan’s import tariff on USA’s import tariff on India’s import tariff on Japan USA India Australia USA India Australia Japan India Australia Japan USA GrainsCrops 35.4 0.2 35.1 0.1 3.6 12.3 0 25 25.8 0 5.1 1.2 MeatLstk 34.4 4.6 15.2 0.0 4.9 12.3 0 27.3 23 0.5 0.9 0.6 Extraction 0.0 0 21.1 0.2 0.1 13.6 0 0.2 13.2 0.3 0.1 0 ProcFood 27.4 4.3 57.4 1.6 3.9 43.9 0 11.9 56.1 1.5 2.5 2.2 TextWapp 3.2 4.5 17.1 6.1 6.2 15 6.8 7 15 9.4 5.4 9.1 LightMnfc 0.2 0 15.4 15 1.2 26.4 1.7 0.4 6.5 4 0.7 0.3 HeavyMnfc 0.4 0 14.8 2.8 1.1 14.5 0 0.6 11.4 2.8 0.4 0.5 Page 7 of 17 Rahmanetal. Economic Structures (2020) 9:45 This study has simulated two scenarios: (i) all bilateral tariff eliminations by all its partners under four different scenarios; and (ii) improvement of trade facilitation by 25% in this region. Here, iceberg trade costs “ams” import-augmenting “technical change” variable has been used to represent trade facilitation. The parameter “ams (i,r,s)” has been introduced to handle bilateral services’ liberalisation as well as other efficiency-enhanc- ing measures that serve to reduce the effective price of goods and services’ imports. The introduction of this variable facilitates simulation of efficiency improvements such as customs’ automation or e-commerce. When ams (i,r,s) is shocked by 25%, 25% more products become available to domestic consumers, given the same level of exports from the source country. To ensure that producers still receive the same revenue on their sales, effective import prices (pms) fall by 25%. However, we simulate following four different scenarios for potential impact analysis of the Indo-Pacific economic cooperation: Scenario Members Indo-Pacific 1 USA, Japan, India, and Australia FTA Indo-Pacific 2 Indo-Pacific 1 + South Asiaa + Southeast Asiab Indo-Pacific 3 CPTPPc + India + Korea + China Indo-Pacific 4 Indo-Pacific 1 + ASEAN + New Zealand + Bangladesh + Sri Lanka + Pakistan + China + Korea + Kenya + Oman + Tanzania + Mozambique + South Africa + Mauritius + Russia + Chile + Mexico + Canada aSouth Asian market, which consists of Afghanistan, Bangladesh, Bhutan, India, Maldives, Pakistan, Nepal and Sri Lanka, has 1.8 billion population and a total GDP of US$ 2.37 trillion in 2016. bSoutheast Asia consists of ten countries: Brunei, Burma, Cambodia, Indonesia, Lao, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. All of these countries are members of the Association of Southeast Asia Nations (ASEAN). Southeast Asia has 622 million population and a total GDP of US$ 2.35 trillion as on 2017. cThe TPP 11 (CPTPP) has been signed on 8 March 2018 in Chile, which has become a global mega deal. 3 Analysis ofthesimulations The welfare and other macroeconomic effects of the simulations under ‘Indo-Pacific 1’ are presented in Table3. The results show that if these four countries (Australia, Japan, India and the USA) remove tariffs, all are expected to experience huge gain in welfare, real GDP and exports. The real GDP could be increased by 0.23% for India, which amounts to US$ 2.69 billion in 2014. Indian exports may increase tremendously, accounted for 2.4% and US$ 5.7 billion, and at the same time import could be increased by 2.3%, which amounts to about US$ 6.8 billion. On the other, illustrated in Table4, the real GDP of Australia, Japan and the USA could be increased by 0.11, 0.05 and 0.01%, respectively, whereas exports may increase by 1.27, 0.58 and 0.56%, respectively. The reduction of tariffs and non-tariff measures including improved trade facilitation would reduce import cost of its trading partner(s). The exports prices would fall, which could make imports cheaper for its partners. Therefore, a rise in terms of trade (TOT) is significantly contributing to the welfare gain in the region. The allocative Page 8 of 17 Rahmanetal. Economic Structures (2020) 9:45 efficiency could increase, which will then lead to higher output and production, especially in food grains, textiles and clothing and heavy industry, thereby expanding real GDP volume. As the imports are higher than its exports in all these four countries, importing the capital machinery for exports may positively affect allocative efficiency. Light manufacturing and textiles and clothing sector are the primary competitive sectors of India. The import tariff of textiles and clothing is about 12.8% of Indian partners. Therefore, elimination of tariff of the textiles and clothing sector could increase exports of this sector significantly. At the product level, India’s exports may likely go up in cases of textiles and clothing and heavy manufacturing goods. Export of textiles and clothing could be the highest gainer, which may increase to about 15%. Australia’s agricultural exports (crops and grains, processed food and meat) could be increased tremendously. Table 3 Macroeconomic impact of tariff eliminations under ‘Indo-Pacific 1’. Source: Authors’ simulation from GTAP version 9 Country Welfare effect (US$ million) Change inreal GDP (%) Change inexports (%) Change inimports (%) New Zealand − 144.51 − 0.01 − 0.09 − 0.71 Australia 2767.05 0.11 1.27 3.25 China − 1788.54 − 0.01 − 0.09 − 0.26 Japan 5035.89 0.05 0.58 1.44 Korea − 447.34 − 0.01 − 0.02 − 0.19 ASEAN − 683.2 − 0.01 − 0.03 − 0.17 Malaysia − 202.99 − 0.02 − 0.03 − 0.15 Vietnam − 92 − 0.04 − 0.03 − 0.2 South Asia − 117.22 − 0.01 − 0.06 − 0.26 India 2692.39 0.23 2.45 2.34 Canada − 793.28 0 0.03 − 0.28 USA 3686.21 0.01 0.56 0.58 Latin America − 695.98 0 0.05 − 0.19 EU25 − 1043.17 0 0.03 − 0.05 Rest of World − 2998.4 0 0.01 − 0.14 Table 4 Impact of tariff eliminations on sectoral trade under ‘Indo-Pacific 1’. Source: Authors’ simulation from GTAP version 9 India Japan USA Australia Import (%) Export (%) Import (%) Export (%) Import (%) Export (%) Import (%) Export (%) GrainsCrops 10.54 − 0.81 11.46 8.08 2.17 5.24 7.13 4.76 MeatLstk 16.08 − 2.43 10.85 13.91 2.52 11.65 8.37 18.59 Extraction − 0.45 4.26 − 0.05 0.56 0.1 0.41 4.03 0.94 ProcFood 2.72 0.6 3.77 5.63 0.85 4.32 2.99 9.02 TextWapp 4.76 15.22 1.02 2.57 1.67 1.67 2.53 1.11 LightMnfc 6.55 1.4 1.93 3.13 0.71 0.33 6.42 − 3.15 HeavyMnfc 3.9 3.09 1.41 − 0.18 0.55 0.45 2.08 1.37 Util_Cons 0.97 − 0.08 1.3 − 2.37 0.39 − 0.6 2.21 − 4.39 TransComm 0.51 − 0.5 0.92 − 0.71 0.32 − 0.33 1.96 − 3.64 OthServices 0.71 − 1.54 0.89 − 1.9 0.28 − 0.48 1.93 − 4.04 Page 15 of 17 Rahmanetal. Economic Structures (2020) 9:45 Authors’ contributions All authors have equally contributed to conceptualising and designing of the research, the process of data collection and data analysis as well as drafting and revision of the manuscript. All authors read and approved the final manuscript. Authors’ informations Dr. Mohammad Masudur Rahman has more than 14 years of research, consulting and teaching experience in New Zealand, China, Japan, Vietnam, Korea and Bangladesh. Recently, Dr. Rahman completed two projects funded by World Bank where he contributed to developing international trade portal for Vietnam and Bangladesh government. The main research focus of Dr. Rahman is regional integration, trade facilitation, non-tariff measures and gravity and CGE modelling. Dr. Prabir De is a Professor at the Research and Information System for Developing Countries (RIS). He is also the Coordinator of ASEAN-India Centre (AIC) at RIS. De works in the field of international economics and has research interests in international trade and development. He is the Editor of The South Asia Economic Journal, published by Sage. Professor Chanwanh Kim is Director, School of Business at Hankuk University of Foreign Studies, Seoul, Korea. He has been conducting policy research for the Government of Korea and several international organisations. He is the Editor of Journal of India and Asian Studies published by World Scientific (Singapore). Funding This study was supported by Hankuk University of Foreign Studies Research Fund of 2018 and National Research Foundation of Korea Grant Funded by the Korean Government (NRF-2017S1A6A3A02079749). Availability of data and materials The dataset that used in this study is available in and bought from the GTAP database version 9 of Perdue University (https ://www.gtap.ageco n.purdu e.edu/datab ases/v9/defau lt.asp), USA. Competing interests The authors declare that they have no competing interests. Author details 1 Dept. of Economics, School of Accounting, Finance and Economics (SAFE), The University of Waikato, Hamilton, New Zealand. 2 Department of Indian and ASEAN Studies, Graduate School of International and Area Studies, Hankuk University of Foreign Studies, Seoul, South Korea. 3 Research and Information System for Developing Countries (RIS), New Delhi, India. Appendix See Table13. Table 13 Regional andcommodity aggregation ofGTAP database. Source: GTAP version 9 SL Aggregated region GTAP region SL Aggregated commodities GTAP commodities 1 China China 1 Grains crops (9 products) pdr wht gro v_f osd c_b pfb ocr pcr 2 USA United States of America 2 Meat Lstk (6 products) ctl oap rmk wol cmt omt 3 EU25 EU 25 Countries 3 Extraction (6 products) frs fsh coa oil gas omn 4 Canada Canada 4 ProcFood (5 products) vol mil pcr sgr ofd 5 New Zealand New Zealand 5 Text Wapp (2) tex wap 6 Australia Australia 6 LightMnfc (7) lea lum ppp fmp mvh otn omf 7 Japan Japan 7 HeavyMnfc (7) p_c crp nmm i_s nfm ele ome 8 ASEAN ASEAN except Malaysia and Vietnam 8 Util_Cons (4) ely gdt wtr cns 9 Malaysia Malaysia 9 Trans Comm (5) trd otp wtp atp cmn 10 Viet Nam Vietnam 10 Oth Services (6) ofi isr obs ros osg dwe 11 South Asia South Asia except India 12 India India 13 Korea Korea 14 Latin America All Latin America 15 Rest of the world Rest of countries in the World of GTAP database Page 16 of 17 Rahmanetal. Economic Structures (2020) 9:45 Received: 10 September 2019 Revised: 19 March 2020 Accepted: 29 June 2020 References Akgul Z, Villoria NB, Hertel TW (2015) Introducing firm heterogeneity into the GTAP model with an illustration in the context of the trans-Pacific partnership agreement. Mimeo, Department of Agricultural Economics, Purdue University. https ://www.gtap.ageco n.purdu e.edu/resou rces/res_displ ay.asp?Recor dID=4445 Armington PS (1969) A theory of demand for products distinguished by place of production. IMF Staff Pap. 16(1): 159–178. https ://ideas .repec .org/a/pal/imfst p/v16y1 969i1 p159-178.html Berden KG, Francois J, Tamminen S, Thelle M, Wymenga P (2009) Non-tariff measures in EU–US trade and investment— an economic analysis, ECORYS report prepared for the European Commission, Reference OJ 2007/S180-219493, Nederland BV Burfisher ME (2016) Introduction to computable general equilibrium models, 2nd edn. 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