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When Elephants Make Peace : The Impact of the China-U.S. Trade Agreement on Developing Countries / Freund, Caroline.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Freund, Caroline.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to Markets.
- Bilateral Mercantilism.
- Computable General Equilibrium Model.
- International Economics and Trade.
- International Trade and Trade Rules.
- Managed Trade.
- Preferential Access.
- Preferential Trade Agreement.
- Trade Diversion.
- Trade Liberalization.
- Trade Policy.
- Trade War.
- Local Subjects:
- Access to Markets.
- Bilateral Mercantilism.
- Computable General Equilibrium Model.
- International Economics and Trade.
- International Trade and Trade Rules.
- Managed Trade.
- Preferential Access.
- Preferential Trade Agreement.
- Trade Diversion.
- Trade Liberalization.
- Trade Policy.
- Trade War.
- Physical Description:
- 1 online resource (27 pages)
- Other Title:
- When Elephants Make Peace
- Place of Publication:
- Washington, D.C. : The World Bank, 2020.
- System Details:
- data file
- Summary:
- Should the China-U.S. trade agreement prompt relief because it averts a damaging trade war or concern because selective preferential access for the United States to China's markets breaks multilateral rules against discrimination? The answer depends on how China implements the agreement. Simulations from a computable general equilibrium model suggest that the United States and China would be better off under this "managed trade" agreement than if the trade war had escalated. However, compared with the policy status quo, the deal will make everyone worse off except the United States and its input-supplying neighbor, Mexico. Real incomes in the rest of world would decline by 0.16 percent and in China by 0.38 percent because of trade diversion. China can reverse those losses if, instead of granting the United States privileged entry, it opens its market for all trading partners. Global income would be 0.6 percent higher than under the managed trade scenario, and China's income would be nearly 0.5 percent higher. By creating a stronger incentive for China to open its markets to all, an exercise in bilateral mercantilism has the potential to become an instrument for multilateral liberalization.
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