The Impact Of ASEAN Free Trade Area On Intra-Asean Manufacturing Trade

Abstract

This study investigates the effects of ASEAN Free Trade Area (AFTA) agreement on the bilateral manufacturing trade between the 10 member countries of ASEAN and 39 of their trading partners. The period ofstudy covers 1995 to 2014. Results obtained from panel data analysis of the gravity model with random effectsshow that the economic sizes, populations, relative endowments, common language and geographical factors like distance, island, landlocked and neighbour are significant determinants of the bilateral manufacturing trade for ASEAN member countries. Moreover, results obtained from the fixed effects model in this study suggests that AFTA has generatedpure trade creation effects in terms of exports. Ontop of that, AFTA has resulted in larger magnitude of trade creation effects in imports than import diversion effects. Overall, AFTA promotes trades among ASEAN member countries through the elimination of tariff and non-tariff barriers, for bringing aboutpure trade creation effects in terms of exports as well as imports and also trade diversion effects in terms of imports. In sum, this study with more recent data set covering more ASEAN trading partners shows empirical evidence to justify the success of AFTA arrangement.

ASEAN-FTA Impact on Rubber and Crude Palm Oil Export: An Empirical Evidence from IMT Countries

“…The distance variable is a proxy of transportation costs, it's indicated that if the distance further, then rubber export between Indonesian and trade partner countries will decrease significantly. These findings are in line and support the study results by Wong et al (2017). On the other side, contrary to the study results by Akhmadi (2017).…”

“…In early April 2015 the number of this type of agreement has increased by 19.8 percent or become 612 RTAs, and 406 of which are running. At present time every country on the planet at least has two RTAs (Wong et al, 2017). Globalization and trade liberalization, with the increase of trade agreement activities amongst some countries, have presented disagreement and contradiction opinions amongst economists (Bradford & Chilton, 2019;Rodrik, 2018).…”

“…(1)The gravity model has been applied to many empirical studies. This model refers to the study by Akhmadi (2017); Okabe & Urata (2014); Pholphirul (2010);Wong et al (2017). We see that one of the main issues is analyzing the specific effects of AFTA as trade policies which are measured using dummy variables, to indicate the existence of a regional trade agreement between countries 𝑖 and 𝑗.…”

Analisis Perdagangan Internasional Indonesia pada Kebijakan ACFTA dan AKFTA

“…Sejalan dengan prinsip yang dikemukakan oleh World Trade Organization (WTO) dalam rangka mendorong pembentukan kerjasama ekonomi di setiap negara melalui skema perdagangan bebas guna meningkatkan perpindahan arus barang dan modal, maka saat ini banyak negara yang telah membangun dan menyepakati kebijakan tersebut tidak hanya secara bilateral tapi juga multilateral (Rohendi, 2014). Demikian halnya dengan ASEAN sebagai federasi beberapa negara yang terletak di Kawasan Asia Tenggara yang juga telah membangun kerjasama perdagangan bebas secara internal di antara seluruh negara anggota yakni Indonesia, Kamboja, Myanmar, Laos, Brunei Darussalam, Malaysia, Filipina, Singapura, Thailand, dan Vietnam dalam bentuk kebijakan ASEAN Free Trade Area (Wong et al, 2017). Di mana saat ini juga anggota ASEAN telah bertambah satu negara dan total menjadi sebelas negara anggota yakni Timor Leste yang pasti juga akan melakukan penyesuaian terhadap kebijakan perdagangan bebas tersebut.…”

Impacts of Tariff Rates on Input Source Choice: Evidence from Indonesia

“…Their results suggest that tariff elimination under the Common Effective Preferential Tariff Scheme facilitates production and sales networks for AFTA's original member countries, including Indonesia. Wong, Liew, and Arip (2017) examine the effects of AFTA on bilateral manufacturing trade between 10 ASEAN countries and their trading partners. Their results suggest that AFTA has generated trade creation effects in exports, while its trade creation effects in imports outweigh its import diversion effects.…”