When Elephants Make Peace : The Impact of the China-U.S. Trade Agreement on Developing Countries
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 d...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/925591583252308139/When-Elephants-Make-Peace-The-Impact-of-the-China-U-S-Trade-Agreement-on-Developing-Countries http://hdl.handle.net/10986/33416 |
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okr-10986-334162022-09-20T00:14:06Z When Elephants Make Peace : The Impact of the China-U.S. Trade Agreement on Developing Countries Freund, Caroline Maliszewska, Maryla Mattoo, Aaditya Ruta, Michele TRADE WAR MANAGED TRADE PREFERENTIAL TRADE AGREEMENT PREFERENTIAL ACCESS CGE MODEL TRADE DIVERSION BILATERAL MERCANTILISM TRADE LIBERALIZATION 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. 2020-03-05T16:15:05Z 2020-03-05T16:15:05Z 2020-03 Working Paper http://documents.worldbank.org/curated/en/925591583252308139/When-Elephants-Make-Peace-The-Impact-of-the-China-U-S-Trade-Agreement-on-Developing-Countries http://hdl.handle.net/10986/33416 English Policy Research Working Paper;No. 9173 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper East Asia and Pacific China United States |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
TRADE WAR MANAGED TRADE PREFERENTIAL TRADE AGREEMENT PREFERENTIAL ACCESS CGE MODEL TRADE DIVERSION BILATERAL MERCANTILISM TRADE LIBERALIZATION |
| spellingShingle |
TRADE WAR MANAGED TRADE PREFERENTIAL TRADE AGREEMENT PREFERENTIAL ACCESS CGE MODEL TRADE DIVERSION BILATERAL MERCANTILISM TRADE LIBERALIZATION Freund, Caroline Maliszewska, Maryla Mattoo, Aaditya Ruta, Michele When Elephants Make Peace : The Impact of the China-U.S. Trade Agreement on Developing Countries |
| geographic_facet |
East Asia and Pacific China United States |
| relation |
Policy Research Working Paper;No. 9173 |
| description |
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. |
| format |
Working Paper |
| author |
Freund, Caroline Maliszewska, Maryla Mattoo, Aaditya Ruta, Michele |
| author_facet |
Freund, Caroline Maliszewska, Maryla Mattoo, Aaditya Ruta, Michele |
| author_sort |
Freund, Caroline |
| title |
When Elephants Make Peace : The Impact of the China-U.S. Trade Agreement on Developing Countries |
| title_short |
When Elephants Make Peace : The Impact of the China-U.S. Trade Agreement on Developing Countries |
| title_full |
When Elephants Make Peace : The Impact of the China-U.S. Trade Agreement on Developing Countries |
| title_fullStr |
When Elephants Make Peace : The Impact of the China-U.S. Trade Agreement on Developing Countries |
| title_full_unstemmed |
When Elephants Make Peace : The Impact of the China-U.S. Trade Agreement on Developing Countries |
| title_sort |
when elephants make peace : the impact of the china-u.s. trade agreement on developing countries |
| publisher |
World Bank, Washington, DC |
| publishDate |
2020 |
| url |
http://documents.worldbank.org/curated/en/925591583252308139/When-Elephants-Make-Peace-The-Impact-of-the-China-U-S-Trade-Agreement-on-Developing-Countries http://hdl.handle.net/10986/33416 |
| _version_ |
1764478715216003072 |