The Effects of Global Trade Liberalisation on Forestry Products Using the GTAP Model

Abstract

The paper analyses the effects of tariff liberalization amongst the leading exporters and importers of forest products, in particular, as well as global merchandise, in general. The study utilises the Global Trade Analysis Project (GTAP) model and its database, version 7. Given that forest products only comprise a small proportion of world merchandise trade, it is expected that trade liberalisation would cause small changes in terms of trade, real GDP, production, consumption and prices of forest products in most countries. In the short-run, national welfare in China and Japan would increase substantially by more than $US400 million while the opposite is true for the United States. In the long-run, national welfare in China, Mexico and Thailand would increase between $US230 million and $US295 million. Food production in Australia, Chile and New Zealand would increase slightly but significantly compared to other countries/regions. Similarly, food consumption in Malaysia and Thailand would increase by about 0.10 per cent.