Mega-Regional Agreements and Their Impact on Australia

Abstract

This paper estimates the effects of emerging mega-regional agreements on the economy of Australia using a Computable General Equilibrium model. Scenarios considered include the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) agreement, its possible enlargement to include five additional members (‘TPP16’) and the Regional Comprehensive Economic Partnership (RCEP) currently under negotiation. The study finds that Australia stands to enjoy real income and trade gains along both the CPTPP and RCEP paths. However, since Australia is already benefiting from its own liberal trade policies and many prior trade agreements, benefits are relatively modest, typically below one per cent of real income.