1. Public Meeting TSIA of EU-ASEAN FTA Global Analysis Report
By: Paul Wijmenga, Floor Smakman, Saara Tamminen, Leon van Berkel
Brussels, 11 September 2008

2. Overview Introduction CGE Modelling Screening Scoping
Issues for Discussion
Contact

3. 1. Introduction (1): Organisation of the Study
ECORYS as lead contractor
Modelling team headed by Prof. Joe Francois
ASEAN partners in 5 different countries: Indonesia, Philippines, Singapore, Thailand and Vietnam

4. 1. Introduction (2): TSIA Methodology
Analyse the economic, social and environmental impacts of trade measures negotiated within an FTA.
Quantitative and qualitative approach: CGE modeling and Causal Chain Analysis.
50% modeling & analysis; 50% consultations and inputs from key stakeholders and civil society:
3 Phases of the study: 1): scenario building, screening and scoping (GAR); 2): in-depth studies of selected sectors/issues; 3): policy recommendations on enhancing or mitigating measures

5. 1. Introduction (3): The Phase 1 Report (GAR)
Overview of current economic, social and environmental issues and trends in the EU and ASEAN
Computable General Equilibrium (CGE) analysis
Screening & Scoping
Consultations EU and ASEAN
End of phase 1: Sector / HI selection

6. 2. CGE Modelling: (1) The Model
Aim of modelling: quantitative analysis of the expected outcomes of the FTA in general equilibrium;
Scenario definitions:
Base year, 2004 (GTAP 7.0);
Experiment 1. Limited FTA Agreement;
Experiment 2. Extended FTA Agreement;
Experiment 3. Extended FTA Plus Agreement.
The scenarios are based on the EU – ASEAN overview (Ch. 2), discussions in the kick-off meeting and the inception report (also online).

7. 3. CGE Modelling: (2) Scenarios
Analysis of three scenarios:
Tariff reductions:
Limited FTA 90%, Extended FTA 97%, Extended plus FTA 97% for food and non-food;
Services (AVE reductions):
Limited FTA 25%, Extended FTA 75%, Extended plus FTA 75%
Trade facilitation:
Limited FTA 1%, Extended FTA 2%, Extended plus FTA 3% (some sectors)

8. 2. CGE Modelling: (3) Outcomes
Macro-economic outcomes include: changes in income, GDP, wages of high and low skilled labour changes, etc.
The CGE model also provides outcomes per sector: output effects, employment effects (high- and low-skilled), price effects, change in value of imports and exports

9. 2. CGE Modelling: (4) Outcomes (ext. FTA)
Table 1: Summary of Macro-economic changes
Scenario / variable
India
Bang
Pak
Sri Lanka
Other South Asia
Other LDCs
ROW
Scenario 2: Extended FTA (short run)
National inc. (change in mln €)
-799
-54
-232
-30
-11
-61
-5 499
GDP (% change)
-0.04
-0.08
-0.02
-0.01
Skilled Real Wage (% change)
-0.20
-0.11
-0.09
-0.03
Unskilled Real Wage (% change)
-0.05
-0.07
-0.10
Value of exports (% change)
0.02
-0.52
-0.16
-0.61
-0.06
Scenario 2: Extended FTA (long run)
National inc. (change in mln €)
-3.469
-110
-963
-60
-21
-144
-0.23
-0.66
-0.13
-0.25
-0.14
-0.71
-0.19
-0.15
Unskilled Real Wage (% change)
-0.57
-0.18
-1.02
-1.99
-0.55
0.15
0.06

10. 2. CGE Modelling: (5) Outcomes (ext. FTA)
Decomposition of Dynamic Real Income Effects (millions of 2007 Euros)
Measure
Scenario
Country
Tariffs
Services
NTB
Total
Ambitious
FTA EU
6,737
14,857
5,225
26,820
Cambodia 74 79
114
267
Indonesia
3,377
7,716
2,022
13,115
Malaysia
2,493
6,124
2,087
10,703
Philippines
2,268
1,216
2,401
5,885
Singapore
763
16,999
2,556
20,317
Thailand
4,473
4,349
2,722
11,543
Vietnam
4,414
1,423
1,143
6,980
Other ASEAN 90
-32
207
264

11. % share of sector in total value-added*
2. CGE Modelling: (6) Sector outcomes EU
Table 3: Change in Sectoral Output for EU27
Static/Short Run
Dynamic/Long Run
Limited FTA
Ambitious FTA
Ambitious Plus FTA
% share of sector in total value-added*
Processed Foods
0.4
0.5
0.6
0.9
4.1
Textiles
-0.9
-1.0
-1.3
-0.8
-0.7
0.8
Wearing apparel
-1.5
-2.0
-2.3
-1.7
-2.2
-2.6
Leather products
-13.7
-17.6
-18.7
-17.3
-21.4
-23.7
0.3
Chemical, rubber, plastic products
0.0
0.1
0.2
4.8
Metal products
2.1
Motor vehicles and parts
0.7
1.0
3.3
Electronic equipment
-1.1
-2.5
-3.0
-3.1
-3.8
1.7
Machinery and equipment nec
4.7
Manufactures nec
1.3
trade services
11.1
Utilities
0,01
0,02
0,07
0,13
0,14
Construction
0,05
0,11
0,1
0,2
0,21
Communication
-0,04
-0,08
Business services, nec
10.2
Other services
15.8

12. 2. CGE Modelling: (7) Sector outcomes ASEAN
Table 4: Main positive and negative sectoral impacts in ASEAN countries
Country
Main sectors with increased outputs
Main sectors with reduced output
Cambodia
Textiles & wearing apparel
Manufacturers nec, Machinery and equipment nec,
Transport equipment nec
Indonesia
Electronic equipment,
Wearing apparel
Business services nec, Motor vehicles and parts
Malaysia
Leather products,
Electronic equipment
Minerals nec,
Machinery and equipment nec
Philippines
Motor vehicles and parts,
Textiles & Wearing apparel
Gas, Cereal grains, Machinery and equipment nec,
Transport equipment nec.
Singapore
Textiles
Insurance
Machinery and equipment nec,
Gas
Thailand
Wood products, Mineral products nec (SR)
Vietnam
Trade
Other ASEAN
Textiles,
Motor vehicles,
Motor equipment nec,
Ferrous minerals

13. 3. Screening: (1) Criteria
…. for choice of sectors and horizontal issues
Cr1: Importance of sector/horizontal issue for EU and ASEAN economies and EU-ASEAN relations;
Cr2: Size of the expected impact of the FTA on
sector’s trade between the EU and ASEAN;
Cr3: Expected social and/or environmental impact of the sector for the EU and ASEAN;
Cr4: Comments and feedback from consultations with key stakeholders and civil society.

14. 3. Screening: (2) Overview Table Sectors
Table 5: Screening and selection of sectors
Cr1:
Importance sector/issue
Cr2:
Economic Impact (output/ employment)
Cr 3:*
Social / environmental effects
Cr4:
Comments civil society
Cereals, grains, nec X
Electronic equipment
Financial services
Fishing
Gas
Leather products
Mineral products nec
Motor vehicles
Oil
Oil seeds
Petroleum, coal products
Processed food
Textiles
Transport services
Wearing apparel
Provisions of services and movement of natural persons/GATS mode 4/issues related to economic migration

15. 3. Screening: (3) Overview Table H.I.
Table 6: Screening and selection of horizontal issues
Cr1:
Importance sector/issue
Cr2:
Economic Impact (output/ employment)
Cr 3:*
Social / environmental effects
Cr4:
Comments civil society
Competition policy X
Intellectual property rights
Investment conditions
Other services, environmental services
Public procurement
Rules of origin
Sanitary- and Phytosanitary measures
Technical standards for industrial products
Trade facilitation

16. 3. Screening: (4) Preliminary Results
Based on the screening criteria, we propose to look at the following sectors and horizontal issues:
Sectors: (1) Cereals and Grains, (2) Motor Vehicles & Automotives, (3) Textiles, Clothing & Footwear, (4) Electronic Equipment and (5) Transport services (maritime transport).
Horizontal issues: (1) Investment Conditions, (2) SPS, (3) Trade Facilitation, (4) IPR and (5) RoO, or….

17. 3. Screening: (5) Possible Alternatives
Sectors
Fisheries
Food processing
Telecommunications
Distribution Services (wholesale & retail)
Financial services
Energy sector
Other ……….?
Horizontal issues
Government Procurement
Competition Policy

18. 4. Scoping
Having identified the sectors and horizontal issues, what are the main topics that need to be researched in Phase 2?
BASED ON:
Your suggestions (feedback form, also online)
Suggestions by our sector experts
Bilateral meetings with civil society and other key stakeholders
FOCUS: In-depth analysis of sectors and horizontal issues – main issues in detail
 See Feedback Form (hand-out)

19. 6. Issues For Discussion - Discussion -
A) You are invited to ask questions and provide comments on the GAR
- Q&A -
B) You’re invited to provide inputs and suggestions for next steps in study, specifically on:
Definite sector and HI selection – Final selection after TSIA Workshop in Bangkok (27 October 2008);
There are several ‘alternative sectors’ that may be chosen over preliminary selection – suggestions (including argumentation)?
We are at the beginning of Phase 2: what are main issues for the sectors and HI (preliminarily) chosen?
Any suggestions for interesting Case Studies?
- Discussion -

20. 6. Contact
For more information, downloading of feedback form or providing feedback directly, contact us at:
Website:
address: