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No trans-pacific partnership? Good or bad for Mexico?

Gabriela Ortiz Valverde (Facultad de Ciencias Economicas y Empresariales, Universidad Complutense de Madrid, Madrid, Spain and Facultad de Ciencias Sociales, Universidad Nacional de Costa Rica, Heredia, Costa Rica)
Maria C. Latorre (Universidad Complutense de Madrid, Madrid, Spain)

Journal of International Trade Law and Policy

ISSN: 1477-0024

Article publication date: 19 June 2017

Abstract

Purpose

The purpose of this paper is as follows: first, it aims to explain the overall economic implications of the trans-pacific partnership (TPP). Second, it aims to provide an in-depth analysis of the TPP’s quantitative impact on an upper-middle economy such as Mexico, as well as on the USA.

Design/methodology/approach

The analysis is performed using a computable general equilibrium (CGE) model.

Findings

The results suggest that in the short run, both Mexico and the USA would slightly benefit from the TPP. Tariff reductions would lead to less bilateral trade between Mexico and the USA and the stronger integration of both countries with the rest of the TPP members. The opposite is true after a decrease in non-tariff barriers (NTBs). Overall, in terms of the impact on Mexico, trade integration with the rest of the TPP members prevails. This suggests that a TPP without the USA could still be beneficial.

Originality/value

Previous studies on the TPP have mainly focused on its impact for the USA, which is also analysed in the present study. The effects of the TPP are estimated for a broad set of micro and macroeconomic variables, paying particular attention to the reductions of NTBs.

Keywords

Acknowledgements

Gabriela Ortiz Valverde is grateful for a scholarship from Universidad Nacional de Costa Rica. María C. Latorre gratefully acknowledges that this research has been conducted, thanks to the financial support of Real Colegio Complutense at the Harvard University and as a Research Fellow of both the Center for International Development (CID) at the Harvard Kennedy School and of Real Colegio Complutense. She also gratefully acknowledges the financial support from the Spanish Ministry of Economy and Competitiveness (Projects: ECO2016-78422-R and ECO2013-41317-R).

Citation

Valverde, G.O. and Latorre, M.C. (2017), "No trans-pacific partnership? Good or bad for Mexico?", Journal of International Trade Law and Policy, Vol. 16 No. 2, pp. 106-123. https://doi.org/10.1108/JITLP-10-2016-0027

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited