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Three types of trade policy adjustments to deal with an unsustainable current account deficit are examined in this paper for their economywide income and equity effects, based on the results of simulation experiments using a CGE model of the Philippine economy. Gross domestic product (GDP) expectably decreases with import rationing and less markedly, with the imposition of a general import surtax; by contrast, adjustment through the reduction of tariffs leads to a larger GDP. The latter result, however, is counterbalanced by a substantial loss in government income. With respect to the distribution of income gains (and losses), the additional market distortions and rent-seeking that accompany the implementation of import rationing heavily discriminate in favor of Metro Manila households, whose average income is the highest among the five household groups distinguished in the model. Moving to a general import surtax represents an improvement in that non-Metro Manila households are penalized less. However, these first two policy options are deemed inferior to tariff liberalization--which yields larger income benefits to small-farm and other rural households relative to the more affluent Metro Manila, other urban, and large-farm households. ; Non-PR ; IFPRI1 ; TMD

Free Trade Agreements (FTAs) between the European Union (EU) and trade partners go far beyond mere elimination of tariffs to include such diverse issues as non-tariff barriers, competition legislation, investment protection, and more. Implementing such provisions requires deep institutional and policy adjustments. This report reviews the international experiences with institutional and policy adjustments needed to implement FTAs with the EU, as seen from a developing country perspective. It focuses on three issues: investment, competitiveness, and competition, including state-owned enterprise reform. The report concludes that the FTAs represent significant challenges for developing countries, but also potential opportunities for a more efficient trading system.

This paper updates the analysis of the global macroeconomic consequences of the COVID-19 pandemic in earlier papers by the authors with data as of late October 2020. It also extends the focus to Asian economies and explores four alternative policy interventions that are coordinated across all economies. The first three policies relate to fiscal policy: an increase in transfers to households of an additional 2% of the GDP in 2020; an increase in government spending on goods and services in all economies of 2% of their GDP in 2020; and an increase in government infrastructure spending in all economies in 2020. The fourth policy is a public health intervention similar to the approach of Australia that successfully manages the virus (flattens the curve) through testing, contact tracing, and isolating infected people coupled with the rapid deployment of an effective vaccine by mid-2021. The policy that is most supportive of a global economic recovery is the successfully implemented public health policy. Each of the fiscal policies assists in the economic recovery with public sector infrastructure having the most short-term stimulus and longer-term growth benefits.