The Bogor Declaration of 1994 proposed free trade in the Asia Pacific region by the year 2020. If implemented as announced, this program will have important implications for the world economy over the next few decades. This paper uses a new dynamic multi-sector global model called the Asia-Pacific G-Cubed Model (APGCUBED) to evaluate the economic impacts of the Bogor Declaration. The focus is on the adjustments between 1995 and 2020 in many of the APEC economies. A key aspect of the study is the role of international capital flows, expectations and physical capital accumulation in determining the size and distribution of income gains from this ambitious program of trade reform. The paper compares the implication of full APEC trade liberalization with liberalization between APEC members on a preferential basis and with liberalization that is restricted to ASEAN member economies. It is found that the largest gains for participating economies are realized by full non-preferential liberalization. Preferential liberalization only between APEC economies by discriminating against non-APEC economies only yields two thirds of these gains.
The prospect of the U.S. turning inward in its economic strategy means that China has freer rein to become the focal point of regional integration efforts. The U.S. appears as largely bereft of a constructive economic strategy towards the most dynamic region in the world.
U.S. failure to follow through on TPP is a huge blow to the credibility of its Asia policy with important economic and geopolitical repercussions. Other countries will move forward with RCEP [the Regional Comprehensive Economic Partnership] and American companies will be at a disadvantage.