Regional Comprehensive Economic Partnership Can Boost Value-Added Trade in Food and Non-Food Sectors in Asia–Pacific Economies

Abstract

This study examines the effects of the Regional Comprehensive Economic Partnership (RCEP) on the value-added trade of food and non-food sectors. This study uses a global computable general equilibrium (CGE) model coupled with an extension module for the origin decomposition of value-added flows embodied in gross trade. The results suggest that by cutting down tariff and non-tariff barriers, the RCEP would significantly stimulate the economies of and gross trade among Asia–Pacific countries involved in the agreement. The potential benefits of the RCEP will be overestimated if we ignore the origin of value added and measure the benefits by gross exports. The domestic components of bilateral value-added flows between RCEP members would increase greatly, indicating an increasingly integrated value chain between RCEP members. Import taxes and non-tariff barriers for processed food, textiles and clothes, and heavy manufacturing are relatively significant in the region, so the RCEP would significantly improve their value-added exports. The domestic component of value-added exports in agricultural products and processed food from RCEP members would be increased significantly, indicating that the closely integrated food value chain boosts the food economies of RCEP members.