A Free Trade Area of the Asia Pacific (FTAAP): Is It Desirable? (original) (raw)
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Journal of Policy Modeling, 2010
This paper analysis the relative economic effects of four East Asian Free Trade Area (FTA) options. A particular feature of the model, which is an extension from a standard CGE model, is the introduction of unemployment with the intention of assessing the changes in the real wage and unemployment in each region under each of those options. The simulation results suggest that a preferred strategy for member regions is the "East Asia FTA" multilateral agreement, 1 which would yield higher gains in welfare and greater economic impacts than any of the other possible bilateral agreements-ASEAN-China, ASEAN-Japan and ASEAN-Korea. However, such an 'ideal' multilateral economic integration might be deterred by the uneasy relationship between Japan and other East Asian nations, reflecting their economic and political differences.
Impact of Free Trade Agreements on Trade in East Asia
2015
The number of bilateral and plurilateral free trade agreements (FTAs) in East Asia has increased rapidly after the 2000s behind the world trend of RTAs. Many studies tackled the challenge of figuring out the impact of FTAs in this region by applying various methodologies. The first half of this paper reviews empirical studies of ex-post evaluation of FTAs in East Asia. A look at earlier studies on the impact of the ASEAN Free Trade Area (hereafter AFTA), the first regional FTA in this region revealed that few studies found robust trade creation effects of AFTA in the 1990s. However, since the 2000s, several studies using detailed trade and tariff data on products or sectors indicate that tariff elimination under AFTA promoted regional trade among ASEAN countries. Recent studies also show tariff elimination is not necessarily the most important measure to promote trade in goods in the case of AFTA. Liberalisation measures-such as reduction of non-tariff measures, trade facilitation and coordination of rules of origin, and improvement of FTA usability-are more important measures to facilitate trade between members other than tariff elimination. Likewise, with regard to bilateral FTAs in East Asia, some ex-post evaluation studies show that these FTAs positively impact trade at some extent. These studies show that the positive impacts are brought not only by tariff elimination under the FTAs but also by other liberalisation measures. The latter half of this paper discusses a basic empirical analysis on the impact of five ASEAN+1 FTAs which have not yet been sufficiently investigated because of shortage of data. We found that trade creation effects of ASEAN-China FTA (ACFTA) and ASEAN-Korea FTA (AKFTA) appear in industrial supplies and capital goods between members. Also, trade in consumption goods is facilitated under ACFTA. On the other hand, the impact of ASEAN-Japan FTA (AJCEP) is not revealed in many cases. These results suggest that these regional FTAs potentiate the positive impact on trade when production and sales networks among members have already been developed. At the same time, the newer FTAs whose members are the same as precedent FTAs should set tariff elimination and other liberalisation measures at more liberalised level than precedent FTAs. From the perspective of effectiveness, the newer regional FTA in this region, such as the Regional Comprehensive Economic Partnership, needs to have a higher level of liberalisation and more inexpensive procedures for members to utilize said FTA than the existing ASEAN+1 FTAs in this region.
2008
The 1997/98 Asian currency crisis has led a once high-flying East Asia to realize its vulnerability to external shocks. This realization has given strong impetus to greater economic integration among East Asian economies, with the ASEAN-Korea Free Trade Area (AKFTA) a case in point. This paper qualitatively and quantitatively examines the economic feasibility of AKFTA: qualitatively using the theory of economic integration, and quantitatively by applying a CGE model. Our two-dimensional analysis provides some, but not overwhelming, support for AKFTA’s prospects as an effective means of promoting trade between ASEAN and the Republic of Korea.
ECONOMIC ANALYSIS OF ASEAN FREE TRADE AREA; BY A COUNTRY PANEL DATA
2005
This paper is an attempt to use the Hausman-Taylor (HT) estimation to examine the determinants of trade flows of Asean Free Trade Area (AFTA). Based on the two-way error component form of the gravity model, we employ the HT technique to estimate export flows by a country panel data of 39 countries for the period 1988-2002. The estimations have shown the following important results. Firstly, export flows among two countries increase more proportionately with GDPs. More interestingly, trade is higher between countries of identical preferences than those of different ones. Secondly, the most crucial result is that AFTA has only produced the trade creation among its members. Finally, this study suggests the importance of trade facilitation policy to support the targets of FTA.
2018
ASEAN is one of dynamic and fast growing economic regionalism. ASEAN has shown rapid growth in trade liberalization with the free trade agreement (FTA), established with China Korea, Japan, Australia and New Zealand. The aim of this research is to investigate the effects of the free trade agreement between ASEAN-China (ACFTA), ASEAN-Korea (AKFTA), ASEAN-Japan (AJCEP), ASEAN-Australia-New Zealand (AANZFTA). The Computable General Equilibrium (CGE) model and the Global Trade Analysis Project (GTAP) database version 9 are applied with the partial and full liberalization scenarios. The GTAP simulations results shows that ACFTA provides a greater positive impact than the other FTAs for each region. In the long run, the welfare of each region has increased, the trade balance has decreased, the volume of exports and imports has increased.
Asean-India and Asean-Korea Fta: Global Trade Analysis Project
Economic Journal of Emerging Markets, 2014
The aim of this research is to investigate the effects of the free trade agreement between ASEAN-India (AIFTA) and ASEAN-Korea (AKFTA). The Computable General Equilibrium (CGE) model was applied in this paper with a Global Trade Analysis Project (GTAP) database version 8. The GTAP simulations results show that AIFTA provides a greater positive impact than the AKFTA for each region. The greater improvement in terms of welfare, GDP, trade and investment is generated under the AIFTA scheme. Implication of this research is required of any reallocation of resources shared by each country heading on sectors which have a comparative advantage. Abstrak Tujuan dari penelitian ini adalah untuk menguji dampak kerjasama perdagangan bebas antara AEAN-India (AIFTA) dan ASEAN-Korea (AKFTA). Analisis penelitian ini menggunakan model Computable General Equilibrium (CGE) dengan pendekatan Global Trade Analysis Project (GTAP) versi 8. Hasil simulasi dengan GTAP menunjukkan bahwa AIFTA memberikan dampak positif yang lebih besar daripada AKFTA untuk setiap negara. AIFTA menghasilkan perubahan kesejahteraan, PDB, nilai perdagangan internasional dan investasi yang lebih besar. Implikasi dari penelitian ini adalah perlu adanya realokasi sumber daya dari tiap-tiap negara terhadap sektor-sektor yang memiliki keunggulan komparatif. Kebijakan yang mendukung FTA dimana memberikan keuntungan yang lebih besar sangat diperlukan.
WTO, China and the Asian Economies: Free Trade Areas and New Economic Relations
The proliferation of free trade agreements (FTAs) and the emergence of new Asian regionalisms such as the enlarged ASEAN (ie, ASEAN+3 or especially ASEAN+China) and other bilateral, plurilateral and multilateral FTAs in recent years pose challenges and offer opportunities but also require research into these important developments and their underlying fundamental trade-growth causation and impact for member countries. Existing methods (eg, CGE and gravity theory) for this kind of study have their serious restrictions in coverage (eg, dealing in trade of goods only) and data (eg, using cross-section data only). The paper develops a novel and more appropriate comprehensive approach by extending the gravity theory and incorporating economic policy and shocks. It then uses a new flexible modelling method to construct a simultaneous-equation model of trade and growth between the ASEAN, Australia and China. Using data from the World Bank national accounts and ICSEAD regional and international trade over the period 1980-2002, the paper then estimates the model by both standard (OLS and 2SLS) and improved estimation methods to provide superior MSE estimates and forecasts for impact and policy study. Implications of the findings for the ASEAN and its trade with China, for regional economic integration and relations, for trade policy and prospects for trade and welfare improvement for the ASEAN and China will also be discussed.
The ASEAN Free Trade Agreement: How Effective?
A careful assessment of intra-regional and extra-regional ASEAN trade volumes from 1970 to 2010 reveals that there has been no significant change during the pre- and post-AFTA era. However, researchers working on the effectiveness of the ASEAN Free Trade Agreement have consistently reported positive trade creationary effects of AFTA. By reassessing the impact of AFTA through the Balassa method of estimating trade creation and diversion, and applying it to traditional gravity estimates, we find that (a) while ASEAN countries have spent more money per dollar earned on foreign goods in the post-AFTA period, this is generally true for all countries in the world, and (b) being a small region with significant historic trade ties, ASEAN, as a whole has always traded more amongst themselves, when compared to the world average, and this fact has been misrepresented as the trade creationary effects of AFTA. By comparing the coefficients of the regionalism dummies of ASEAN, within the scope of the gravity model, we find that there has been no significant change in these coefficients, when the sample is divided into the pre-and post-AFTA years. We thus conclude that the free trade agreement in question has had no significant impact on intra-ASEAN trade.
Asean-Canada Free Trade Agreement: Potential Economic for Asean Member Countries
Optimum: Jurnal Ekonomi dan Pembangunan
ASEAN and Canada agreed to establish cooperation as ASEAN-Canada Free Trade Agreement (FTA). This cooperation aims to strengthen economic relations between ASEAN and Canada by eliminating tariff barriers for almost all of trade in goods. Therefore, this study aims to calculate how big the effect of the ASEAN-Canada FTA trade agreement on the macroeconomic conditions of ASEAN member countries. The analysis method used is Computable General Equilibrium (CGE) model using Global Trade Analysis Project (GTAP) version 9A. This cooperation is expected to reduce trade barriers in all sectors, particularly tariff reductions as a representation of declining trade barriers in both ASEAN and Canada. This study analyse two trade policy scenarios by 50% and 100% (full liberalization) tariff reduction. The simulation results show that all ASEAN member countries get the benefit from full liberalization or a 50% tariff reduction on welfare except Laos and Philippines. In addition, this cooperation also can increase the real GDP in all ASEAN member countries and trade balance for Indonesia, Philippines, Singapore, Myanmar and Canada. It also has negative impacts on inflation and investment for some ASEAN member countries such as