Trade Creation and Trade Diversion Effects of the ASEAN-China FTA, ASEAN-Korea FTA, and ASEAN-India FTA Implementation on the export of Indonesia's Food and Beverages Industry Products

Abstract

This research is aimed to analyze the effects of trade creation and trade diversion which occured on the establishment of such cooperation for the export of Indonesian food & beverage industry products with trading partners either with its members or non-members cooperation. This research was conducted by using a test from 12 countries in the period of 2005-2015, estimated using a modified gravity model by increasing the variable on dummy FTA as a proxy from the impacts on the implementation of ACFTA, AKFTA and AIFTA. The estimate results of this research indicate that the implementation of ACFTA, AKFTA and AIFTA gives positive and significant effect of trade creation and trade diversion on the export of Indonesian food and beverage products. This indicates that the implementation of ACFTA, AKFTA and AIFTA creates a trade creation effects by increasing intra-regional trade between ACFTA, AKFTA and AIFTA member countries and brings out trade diversion with non-member countries.