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APEC early voluntary sectoral liberalisation

Staff research paper

This paper by Phillipa Dee, Alexis Hardin and Michael Schuele was released on 31 July 1998. An earlier version of this paper was presented at the 4th APEC Roundtable: Regional Cooperation and Asian Recovery, held in Boston in May 1998. It examines the likely long-term effect of selected early voluntary sectoral liberalisation.

The paper is the second paper examining the effects of APEC trade liberalisation initiatives. The first, The Impact of APEC's Free Trade Commitment, was released by the Industry Commission in February 1996.

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This paper examines selected EVS1, initiatives first nominated by APEC members at their Vancouver meeting in November 1997. It finds that while some are likely to lead to real income gains for a majority of APEC members, others could generate significant economic losses.

A key benefit of broadly-based trade liberalisation is increased access by industries and consumers to cheaper and/or better quality imported products and services. This allows some resources in import-competing industries to be reallocated to more productive uses domestically.

But partial liberalisation can have the opposite effect where relatively low-protection upstream sectors are liberalised, while more highly protected downstream processing sectors remain protected.

Some of the nominations for APEC early voluntary sectoral liberalisation (EVSL) are sectors with low or moderate protection, at the upstream end of the processing chain. Other nominations have much broader coverage.

The paper examines a range of modifications to one of the proposals which could largely eliminate such problems. It ends with some suggested guidelines for designing future sectoral proposals.

Background information

02 6240 3330

Copyright, Preface, Contents, Summary

1 Introduction
Selected sectors
First tier sectors
Second tier sectors

2 A framework for examining sectoral liberalisation proposals
The modelling framework
Proposals to be examined
Sectors covered in the analysis
The extent of liberalisation

3 The impact of early voluntary sectoral liberalisation
Impact of five selected EVSL proposals

4 Avoiding second-best welfare losses

5 Directions of APEC early voluntary sectoral liberalisation


A Key features of the IC95 model

B EVSL proposals