TRADE POLICY AND SUSTAINABLE DEVELOPMENT MEETING
Geneva, 6 -- 8 October 2015
EMPLOYMENT IMPACTS OF MEGA-TRADE DEALS
Session-5
Mr. David VANZETTI
Visiting Fellow
Crawford School of Public Policy
Australian National University
Employment impacts
of mega-trade deals
David Vanzetti
Australian National University
Trade Policy and Sustainable Development Meeting
UNCTAD, Geneva, 6-8th October 2015
Objectives
• TPP, RCEP, TTIP, Doha
• Under negotiation
• Assess trade and employment
impacts
• Exemptions not known?
2
Global general equilibrium
•
•
•
•
•
•
•
GTAP
Version 9, base 2011
Bilateral trade and tariffs
Includes preferential tariffs (needed for FTAs) from TASTE
Whole economy
Includes resource (land, labour, capital) constraints
Limitation - each country: one region, one household
3
Scenarios
• Baseline to 2015, 2020 and 2025
• ‘Modest’ FTA with many exemptions
i.
ii.
iii.
iv.
TPP
RCEP
TTIP
Doha
4
Methodology
• Specify baseline growth projections of GDP, labour, land,
capital and productivity
• Simulate alternative scenarios or negotiated tariff
reductions using previous FTAs as a guide to exemptions
• Report deviation of alternative scenarios from baseline
5
Baseline
140000
Deviation
120000
100000
80000
Projected
Simulated
60000
40000
20000
Historical
Projection
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
0
Not to scale
6
Baseline in steps
300
250
Deviation
200
Projected
Simulated
150
100
Historical
Projection
50
0
2011
2015
2020
2025
7
Exemptions
• Scheduled tariff cuts have exemptions for sensitive
products
• Few in number but cover large volume of trade
• These differ by partner
• Specify HS 6 level tariff cuts (5052 products) from bilateral
applied tariff schedules as negotiated
8
TASTE
•
•
•
•
•
•
Aggregates tariffs weighted by bilateral trade
Contains bilateral bound and applied tariffs and trade
5052 HS6 commodities x 236 regions
186,835,304 records
Aggregate to 30 sectors x 32 regions
Generate tariff cuts for GTAP
9
Sectoral coverage
Agriculture Industrial
Rice
Other cereals
Oilseeds
Vegetable oils
Sugar
Vegetables, fruit, nuts
Plant fibres
Other crops
Livestock
Beef and veal
Pork and poultry
Dairy products
Food products nec
Services
Beverages & tobacco
Transport and comm.
Textiles
Utilities
Wearing apparel
Business services
Electronics
Other services
Petroleum, coal products
Transport and comm.
Motor vehicle & trans equip Utilities
Wood & paper products
Chemical, rubber & plastics
Machinery and equipment nec
Mineral products nec
Manufactures
10
Labour
Label
Description
Clerks
Clerks
Service_shop
Retail services
Tech_aspros
Technical and professional
Off_mgr_pros
Office managerial
Ag_othlowsk
Agriculture and other low skilled
11
Projected GDP
2011=100.
250
200
150
2011
2015
2020
2025
100
50
0
Mexico
Source: IMF
Indonesia
Vietnam
Mexico, growth in factors
2011 to 2025
2011=100.
200
180
160
140
120
2011
2015
2020
2025
100
80
60
40
20
0
Labour
Source: IMF
Capital
Land
Natural
resources
Productivty
Results
• Macro
•
•
•
•
Welfare
Exports
Imports
Real wages
• Sector
• Output
• Employment
14
Global welfare in 2020
relative to 2011
30000
25000
20000
Base
TPP
RCEP
TTIP
Doha
$b 15000
10000
5000
0
Base
TPP
RCEP
TTIP
Doha
Little change from baseline
15
Global welfare in 2020
relative to baseline in 2020
70000
60000
50000
TPP
RCEP
TTIP
Doha
40000
$m
30000
20000
10000
0
TPP
RCEP
TTIP
Doha
Doha Round dominates
16
Winners and losers
Welfare in 2020 relative to baseline in 2020
5000
4000
3000
TPP
RCEP
TTIP
Doha
$m 2000
1000
0
Mexico
Indonesia
Vietnam
-1000
Vietnam gains from TPP
17
Exports
in 2020 relative to 2011
70.0
60.0
50.0
Base
TPP2
RCEP
TTIP
Doha
40.0
$m
30.0
20.0
10.0
0.0
Mexico
Indonesia
Vietnam
Modest gains
18
Indonesia: Real wages vary by type
in 2020 relative to 2011
40
35
30
25
% 20
15
10
5
0
Clerks
Retail
Tech
Office
Agric
Oversupply of skilled labour
19
Indonesia: Real wages
in 2020 relative to 2020 base
0.2
0.15
0.1
% 0.05
0
TPP
RCEP
TTIP
Doha
-0.05
-0.1
RTAs have little impact
20
Vietnam: Employment by sector Doha
scenario
in 2020 relative to 2020 base
25
20
15
10
5
0
-5
RCE
CER
OSD
VOL
SUG
VFN
PFB
OCR
LVS
FF
RES
BV
PP
DRY
OFD
B_T
TXT
WAP
ELE
P_C
MVT
WPP
CRP
OME
NMM
MAN
TSP
UTL
BSV
SVC
%
-10
-15
Movement from manufactures
to textiles
21
Implications
• Likely impacts from proposed FTAs
• Intra-FTA trade increases
• Income and real wages increase
• However, gains are small compared with underlying
growth
• Growth depends on capital and productivity
22
Limitations
•
•
•
•
•
•
Speed of adjustment
One representative firm/household per region
Five labour types
Substitutability between labour types
Substitutability between labour and capital
Closure - wages vs employment
23
The End
24