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Economic Modelling of the Post-2005 TCF Assistance Arrangements

Consultancy report

This consultancy report was produced by Econtech Pty Ltd for the Post-2005 Textile, Clothing and Footwear Assistance Arrangements public inquiry.

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Contents

Executive Summary

Introduction

1 Economic Modelling
1.1 Key Features
1.2 Key Long-Run Assumptions
1.3 Trade Elasticities
1.4 Features for Estimating Effects on Consumer Welfare

2 Industry Assistance Scenarios
2.1 TCF Industry Assistance Scenarios
2.2 Modelling Outputs
2.3 1993/94 Input-Output Tables

3 Scenario 1: Cutting TCF Tariffs to 5%
3.1 Detailed TCF Industry Effects
3.2 Broader TCF Industry Effects
3.3 Wider Industry Effects
3.4 Regional Effects
3.5 National Macroeconomic Effects
3.6 Different Measures of Consumer Welfare
3.7 Gross Gain in Consumer Welfare and Level of Disaggregation
3.8 How Significant is the Gross Gain in Consumer Welfare?

4 Scenario 2: No SIP Scenario
4.1 Detailed TCF Industry Effects
4.2 Broader TCF Industry Effects
4.3 Wider Industry Effects
4.4 Regional Effects
4.5 National Macroeconomic Effects

5 Scenario 3: Reduced Assistance Scenario
5.1 Detailed TCF Industry Effects
5.2 Broader TCF Industry Effects
5.3 Wider Industry Effects
5.4 Regional Effects
5.5 National Macroeconomic Effects

6 Contribution of Assistance Changes to Consumer Welfare

7 Sensitivity Analysis
7.1 TCF Industry Effects
7.2 Wider Industry and Regional Effects
7.3 National Macroeconomic Effects

8 Issues and Policy Implications
8.1 Assistance Rates
8.2 Timing of Reducing Assistance Rates
8.3 Conclusion

Attachment A Detailed Model Simulation Results

Attachment B TCF Industries, Products and Trade Elasticities in MM600+

Attachment C Detailed Sensitivity Analysis Results