The Impact of ASEAN +1 FTAs on ASEAN's Trade

Misa Okabe

Chapter 2 in East Asian Integration (First Edition), pp 25-66 from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: With the number of free trade agreements (FTAs) in East Asia having increased rapidly since the beginning of this century, a large number of studies have attempted to assess the impact of FTAs in the region. In the first half of this paper we review empirical studies of ex-post evaluation of FTAs in East Asia. Although few studies found robust trade creation effects of AFTA in the 1990s, recent studies indicated that tariff elimination under AFTA promoted regional trade amongst Association of Southeast Asian Nations (ASEAN) countries. Likewise, with regard to bilateral FTAs in East Asia, some ex-post evaluation studies show that these FTAs have had some positive impact on trade, not only as a result of tariff elimination under the FTAs but also due to other liberalisation measures. In the second half of this paper we conduct an empirical analysis on the impact of ASEAN FTAs. We found that trade creation effects of imports under the ASEAN–China FTA (ACFTA) and the ASEAN–Korea FTA (AKFTA) appear in industrial supplies, capital goods, and consumption goods between members. The impact of the ASEAN–Japan FTA (AJCEP) remains unclear in many cases. These results suggest that these regional FTAs facilitate trade when production and sales networks amongst members have already been developed. However, the newer FTAs, the members of which are the same as precedent FTAs, have had little impact on trade amongst members. To be effective, a region-wide FTA, such as the Regional Comprehensive Economic Partnership, needs to have a higher level of liberalisation and lower utilisation costs than the existing ASEAN+1 FTAs in the East Asia.

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