The analysis of potential additional tariff increases by the United States’ (US) new administration, using the Global Trade Analysis Project (GTAP) computable general equilibrium (CGE) model, reveals that unilateral tariff hikes initially boost US nominal income through increased government revenue. However, retaliatory tariffs from other economies lead to a decline in US income due to contracting economic growth and reduced tax revenues. Real GDP in the US declines in all scenarios, with the negative impact intensifying when tariffs extend to its free trade agreement (FTA) partners. While the US trade balance improves due to reduced imports, other economies, particularly the People’s Republic of China, experience declines in nominal income and real GDP due to deteriorating terms of trade and reduced exports. Economies with FTAs with the US, such as the Republic of Korea, are expected to see positive effects through increased nominal income and real GDP due to trade diversion benefits.

The potential for connectivity among Asian carbon markets is significant, with economic, environmental, and strategic benefits anticipated. Economically, linking markets could lower emissions-reduction costs by offering cheaper credit options and increase liquidity while reducing price volatility. Environmentally, it could minimize carbon price differentials and promote cleaner environments. Strategically, it could foster regional relationships and demonstrate global climate change leadership, potentially enabling more ambitious climate goals. However, uncertainty persists regarding the extent and nature of market integration due to varied technical designs, governance structures, and operational capacities across existing and proposed markets. This webinar aimed to understand the history and experiences on carbon market linkages, and the required institutional, procedural, and regulatory mechanisms. It included discussions on the potential benefits, barriers to linkages, and pathways forward for Asian carbon market connectivity in light of evolving international carbon market trends and policies.

As G20 emerging markets account for almost one-third of world GDP and about one-quarter of global trade, spillovers from shocks originating in these economies can have important ramifications for global activity. Chapter 4 of the IMF’s World Economic Outlook April 2024 documents that, since 2000, spillovers from shocks in G20 emerging markets—particularly the People’s Republic of China (PRC)—have increased and are now comparable in size to those from shocks in advanced economies. Trade, notably through global value chains, is a key propagation channel. Spillovers generate a reallocation of economic activity across firms and sectors in other countries. Looking ahead, a plausible growth acceleration in G20 emerging markets, even excluding the PRC, could support global growth over the medium term and spill over to other countries. Policymakers in recipient economies should maintain sufficient buffers and strengthen policy frameworks to manage the possibility of larger shocks from G20 emerging markets.

New approaches under Article 6 of the Paris Agreement provide opportunities for linking emission trading schemes (ETS) between jurisdictions. This can be useful for Asia and Pacific economies by increasing the liquidity of a carbon market, offering regulated entities additional abatement opportunities, and reducing the cost of achieving the combined emissions caps of linked ETS. This webinar sought to understand the theoretical underpinnings and practical implementation of ETS linkages in the Asia and Pacific region.

The webinar aimed to highlight the timely implementation of the RCEP Agreement and the importance of activating the RCEP’s built-in agenda to ensure the effective achievement of RCEP’s goals. Key built-in provisions on trade in goods including rules of origin, trade in services, investment, and electronic commerce were presented and the implementation challenges were discussed. Aware that substantial gains could be further realized if RCEP implementation is joined by an extended and fast-forward ambitious built-in agenda, an extended roadmap was also presented which identifies additional initiatives where the RCEP could bring new benefits with respect to existing and overlapping integration efforts in the region.

Based on the ADB report, Integrated Approach to Trade and Transport Facilitation, that looked into regional policy documents to identify gaps in discussion of trade and transport facilitation and presented a diagnostic framework for trade readiness at national and sub-national levels, the 32nd edition of the RCI-POD webinar presented its findings, diagnostic framework, and policy recommendations. The webinar also brought together a panel of experts that further shed light on adopting a comprehensive approach to trade and transport facilitation that is technology-driven, and helps provide a sustainable, resilient, and inclusive development outcome.