The Impact of AFTA on Intra-AFTA Trade

Shujiro Urata and Misa Okabe

No DP-2013-05, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: ASEAN countries have liberalized intra-ASEAN trade over the last 20 years by establishing the ASEAN Free Trade Area (AFTA). This paper aims to examine the impact of trade liberalization under AFTA on intra-ASEAN trade. By applying a gravity model, we find positive and significant trade creation effects from the tariff elimination for a wide range of products. We also find that the elasticity of tariff reduction on imports tends to be much larger than that on exports. Trade creation effects for the new ASEAN members are relatively small compared to those for the old members. Our results show that AFTA has been successful in promoting intra-AFTA trade, but we argue that further expansion may be achieved by increasing the use of AFTA and by reducing/removing non-tariff measures (NTMs) through such ways as improving customs procedures and harmonizing/mutually recognizing product standards.

Keywords: ASEAN Free Trade Area; Intra-regional trade; Gravity model, Trade creation effect. (search for similar items in EconPapers)
JEL-codes: F13 F15 O19 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2013-05
New Economics Papers: this item is included in nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: The impact of AFTA on intra-AFTA trade (2014)
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