Reassessing the Impact of the ASEAN-India Free Trade Agreement

Tham Siew Yean () and Andrew Kam Jia Yi
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Tham Siew Yean: Institute of Malaysian and International Studies (IKMAS) Universiti Kebangsaan Malaysia 43600 Bangi, Selangor D.E. MALAYSIA
Andrew Kam Jia Yi: Institute of Malaysian and International Studies (IKMAS) Universiti Kebangsaan Malaysia 43600 Bangi, Selangor D.E. MALAYSIA

Jurnal Ekonomi Malaysia, 2014, vol. 48, issue 2, 99-110

Abstract: The ratification of the ASEAN-India Free Trade Agreement (AIFTA) in 2009 signals a potential for increased trade flows between ASEAN and India. Previous studies have focussed mainly on the welfare impact of the agreement and its impact on overall trade, especially trade in agricultural products. The first objective of this study seeks to compare the impact of the AIFTA on the exports of manufactured goods from ASEAN to India and vice versa. The second is to ascertain the relative importance of the scheduled tariff liberalization in the AIFTA compared with other contributory factors in the export of manufactured goods between ASEAN and India. The study uses an augmented gravity model as this type of model allows for the control of other trade related variables and to quantify any changes in a country’s trade due to the agreement. The main findings in this study indicate that ASEAN gains more from the scheduled tariff liberalization in this agreement compared to India. However, the impact of tariff liberalization on the exports of manufactured goods from ASEAN and India with each other is relatively smaller compared to other contributory factors, especially trade costs. The AIFTA will have to strengthen specific trade facilitation measures in the agreement in order to increase exports of manufactured goods from ASEAN to India and vice versa.

Keywords: ASEAN-5; ASEAN-India FTA; India; exports; gravity model; manufactured goods; tariffs (search for similar items in EconPapers)
Date: 2014
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