The impact of TPP and RCEP on tea exports from Vie

AGRICULTURALECONOMICSAgriculturalEconomics00(2017)1–12TheimpactofTPPandRCEPonteaexportsfromVietnam:thecaseoftariffeliminationandpesticidepolicycooperationBoXiong∗DepartmentofSocialServices,StateofCalifornia,Sacramento,CA,95814,UnitedStatesofAmericaReceived7March2016;receivedinrevisedform3October2016;accepted10October2016AbstractRegionaltradeagreementsarethedominantarrangementforeconomicintegration.Whatdoesadualmembershipmeanforcountriesparticipatinginmultipleregionalnegotiations?WeaddressthequestionfromtheperspectiveofteaexportersinVietnam,amemberofboththeTrans-PacificPartnership(TPP)andtheRegionalComprehensiveEconomicPartnership(RCEP).Focusingontheremovaloftariffsandthecooperationonpesticideresiduestandards,wefindthattheTPPagreementwillraiseVietnam’steaexportsbyabout$4millionayearifTPPendorsesCodexstandards.However,VietnameseteaexportswilldeclineifTPPendorsesAmericanstandards,unlesssufficienttechnicalassistanceisprovided.AftertheRCEPagreementtakeseffect,teaexportersfromChinaandIndiawillfurtherpenetratetheTPPmarketsbyre-exportingfromVietnam.JELclassifications:F15,Q17keywords:Regionaltradeagreement;TPP;RCEP;Tea;Maximumresiduelimit;Vietnam;Nontariffbarrier1.IntroductionRegionaltradeagreements(RTAs)areproliferatingastheDoharoundofmultilateralnegotiationsmadelimitedprogresstowardafreerglobalmarket(LabordeandMartin,2015).TheTrans-PacificPartnership(TPP)agreementwassignedinFebruary2016.The12TPPmembernations,i.e.,Australia,Brunei,Canada,Chile,Japan,Malaysia,Mexico,NewZealand,Peru,Singapore,UnitedStates(US),andViet-nam,arecommittedtoextensivereformspertainingtointerna-tionaltradeanddomesticpolicies.TheTransatlanticTradeandInvestmentPartnership(TTIP)negotiationbetweentheUSandEuropeanUnion(EU)finishedits13roundinApril2016.TheRegionalComprehensiveEconomicPartnership(RCEP)ne-gotiation,whichinvolvesAustralia,China,India,Japan,NewZealand,SouthKorea,andthe10membersoftheAssociationofSoutheastAsianNations(ASEAN),istoconcludeinlate2016.AprominentfeatureofRTAsisthattheyoverlapgeograph-ically.Forinstance,theUSparticipatesinbothTPPandTTIP.Australia,Brunei,Japan,Malaysia,NewZealand,Singapore,andVietnamaremembersofbothTPPandRCEP.Whatdoes∗Correspondingauthor.Tel.:[phone];E-mailaddress:[e-mail](B.Xiong).adualmembershipmeanforacountryinvolvedinmultiplere-gionaleconomicnegotiations?DovariousRTAscompetewithorcomplementeachother?Weaddressthesequestionsfromtheperspectiveofteaex-portersinVietnam,amemberofbothTPPandRCEP.Inpar-ticular,wefocusontheroleofRTAsineliminatingtariffsandreconcilingpesticideresiduestandardsinthelongterm.Usinganeconomicsimulationmodelcalibratedwithmarketdataandpolicyparameters,wefindthattheTPPagreementwillraiseVietnam’steaexportsbyabout$4millionayearifTPPen-dorsesCodexstandards.However,VietnameseteaexportswilldeclineifTPPendorsesAmericanstandards,unlesssufficienttechnicalassistanceisprovided.AftertheRCEPagreementtakeseffect,teaexportersfromChinaandIndiawillfurtherpenetratetheTPPmarketsbyreexportingfromVietnam.Theresultsaretimelyforteaproducers,processors,andexportersinSoutheastAsia.ThecasestudyofteaalsoshedslightontheinteractionsoftheTPPandRCEPagreements,withpol-icyimplicationsfortraderepresentativesinpursuitofregionaleconomicintegration.Theremainderofthearticleisorganizedasfollows.InSec-tion2,weprovideanoverviewoftheworldmarketforteaproductsandtherelevanttradepolicies.Section3reviewstheTPPandRCEPnegotiationsanddrawsimplicationsfortheteamarketinparticular.InSection4,weproposeapartialC2017InternationalAssociationofAgriculturalEconomistsDOI:10.1111/agec.123432B.Xiong/AgriculturalEconomics00(2017)1–12Table1Worldteatrade:TPP,RCEP,andnonmembersTPPRCEPaNonmembersImportersQuantityTariffQuantityTariffQuantityTariff(1,000tons)(%)(1,000tons)(%)(1,000tons)(%)UnitedStates129.70.96Japan34.61.28EU-27338.10Japan34.61.28Malaysia22.60Russia172.82.09Malaysia22.60Australia21.60Others1,275.5Australia21.60Singapore5.00All2,051Chile21.20Thailand4.50Canada19.80NewZealand2.60Singapore5.00SouthKorea0.923NewZealand2.60Cambodia0.35Mexico0.820Brunei0.20Peru0.86Brunei0.20ExportersQuantityQuantityQuantity(1,000tons)(1,000tons)(1,000tons)Vietnam136.6China313.6SriLanka340.2India233.7Kenya410.0Vietnam136.6Others548.3Indonesia68.6All2,051Note:aTeatradedataforLaos,Philippines,andMyanmararenotavailable.NationswithdualmembershipareinItalic.Quantitiesareaveragedover2013–2014.TariffsareweightedbytradeflowsattheHarmonizedSystem6-digitlevel.Theproductcodesforteaare090210,090220,090230,and090240.Datasources:COMTRADEandMACMAP.equilibriumsimulationmodeltocharacterizetheworldmarketfortea.Wethencalibratethemodelwitheconomicandpol-icyparametersanddiscussthesimulationresultsundervariouspolicyscenarios.Section5concludesthearticle.2.Anoverviewoftheworldmarketfortea2.1.ProductionandtradeTheworldproductionofteaismorethan5milliontonsayear.1Productionishighlyconcentratedinfivecountries:Chinasupplies1.9milliontons,India1.2milliontons,Kenya430,000tons,SriLanka340,000tons,andVietnam220,000tons.Table1displaystheworldteatradebymarkets.AsshowninTable1,theworl