Regional Trade Agreements in East Asia: Will They Be Sustainable?*

By assessing the sustainability of regional trade agreements (RTAs) for East Asia, we quantitatively evaluate the likely impact of proposed East Asian RTA strategies on the East Asian economies and the world economy with respect to consumption, production, volume of trade and terms of trade effects by applying a multi‐country and multi‐sector computable general equilibrium model. These strategies include: (i) the ASEAN Free Trade Area (AFTA: a being‐left‐alone strategy); (ii) an ASEAN Hub RTA (a hub‐and‐spoke type of overlapping RTA strategy); (iii) the AFTA versus a China–Japan–Korea RTA (a duplicating or competing RTA strategy); and (iv) an ASEAN+3 RTA (an expansionary RTA strategy). We find that an expansionary ASEAN+3 RTA could be a sustainable policy option because the members’ gains would be significantly positive, with more equitably distributed gains between members than when using other strategies. The effect on world welfare would also be positive and the negative effect on nonmembers would not be very strong. More interestingly, if the East Asian countries cooperate with Pacific Basin countries to form an APEC‐level RTA, such as a free trade area of the Asia‐Pacific, the extension of the regional trade bloc might be considered a more desirable policy option than the proposed East Asian RTAs for East Asian economies, even though countries excluded from the free trade area of the Asia Pacific are worse off.     

China's Anti‐dumping Problems and Mitigation through Regional Trade Agreements

The present paper explores the opportunities for China's regional trade agreement (RTA) initiatives to mitigate its anti‐dumping problems. The paper highlights the severity and discriminatory nature of China's anti‐dumping problems. The high concentration of the share of anti‐dumping actions taken by the top 4 and top 8 anti‐dumping initiators is noted. Our finding of a weak effect of existing RTAs on mitigating China's anti‐dumping problems supports the argument that China could become more active in mitigating anti‐dumping problems through RTA negotiations. An RTA can include a higher level of openness in exchange for an improvement in regional anti‐dumping provisions. Case studies on RTAs involving the EU, the USA and India offer some precedents for offering inducements and modifying regional anti‐dumping provisions. The approaches for China may lie in obtaining market economy status from intensive anti‐dumping initiators at RTA levels and also altering regional anti‐dumping provisions that could be put in place in exchange for some potential concessions.     

The Evolution and Reshaping of Globalization: A Perspective Based on the Development of Regional Trade Agreements

With the weakening role of the World Trade Organization multilateral trading system, the globalization pattern is moving toward regional economic integration. As a result, the number of regional trade agreements (RTAs) has rapidly increased. New trends in international economics and trade, such as the withdrawal of the US from the Trans‐Pacific Partnership and the trade disputes between the US and China, have revealed the intention of the developed countries represented by the US to reshape the direction of globalization. This paper combines the relevant research conclusions and current stylized facts to examine the evolution and reshaping of globalization. We find that: (i) countries have different attitudes toward the recent round of globalization, which are related to changes in the patterns of income distribution within countries caused by the last round of globalization; and (ii) regional economic development is an effective way to reshape globalization. The self‐strengthening effect of the hub country in the trade network has promoted global RTA expansion.     

The Rise of China: Prospects of Regional Trade Policy

China now engages in multilateral trade liberalization as a new member of the WTO. Concurrently, the number of regional trade agreements is increasing worldwide. China and its trading partners would benefit from increased regional liberalization. Using a gravity equation for 23 Asia-Pacific countries between 1992 and 2000, we show that ASEAN and APEC currently have small effects on Asia-Pacific exports, which are mainly influenced by growth, trade barriers, and common language. However, we find that China’s participation in regional agreements has large export potentials, not only with respect to ASEAN, but also in a broad agreement including South and East Asian countries. JEL no. F15, F17     

Measuring Multi‐Membership in Economic Integration and Its Trade Impact: A Comparative Study of ECOWAS and SADC

One of the intriguing aspects of African regional trade agreements (RTAs) is the extent of multi‐membership, where many African countries are members of more than one RTA. Using a gravity model for 25 countries and the years 1980‐2006, we measure the extent of multi‐membership and compare its impact in two major African regional blocs, Economic Community of West Africa States (ECOWAS) and Southern Africa Development Community (SADC). We find that the impact of multi‐membership critically depends on the characteristics of the multi‐membership of regional integration initiatives. We find a positive impact if an additional membership complements the integration process of the original regional integration initiative: overlapping memberships had a much stronger and significant positive effect on bilateral trade within ECOWAS compare with an insignificant impact within the SADC.     

Study of the Measurement and Determinants of Intra‐industry Trade in East Asia*

The present paper investigates the development of intra‐industry trade (IIT) among the East Asian economies over the 1970–1996 period. A dynamic index is used to capture the changes in the structure of trade flows. Based on this approach, IIT is decomposed into horizontal (HIIT) and vertical components (VIIT) and the determinants of each are investigated. The results show that both HIIT and VIIT have exhibited increased importance over the sample period in manufacturing. Using pooled panel data the two‐way trade in all measures of IIT is found to be positively related to the country‐specific variables, such as the market size, exhange rate depreciation, the levels of development and income, and negatively to the geographic proximity of the partners. Economies of scale are seen to have a positive influence on IIT and HIIT, but a negative relationship with VIIT. Although the relative openness of a country's trade regime shows no significant relationship with any form of IIT, a trade imbalance does affect IIT and HIIT flows. The findings have implications for assessing the structural adjustment costs associated with the trade liberalization process as HIIT is associated with demand for variety and relates to two‐way trade in goods of similar quality, while VIIT is driven by international specialization and differences in relative factor endowments.     

Patterns and determinants of intra-industry trade in Asia

Intra-industry trade (IIT) has gained in importance across Asia as a result of the rapid growth of Asian economies and their key role in the international fragmentation of production. This paper examines the level of IIT for 22 countries in East, Southeast, South, and Central Asia in 2003. IIT is measured as a multilateral trade-weighted index and is reported for ten different categories of goods in the primary and secondary sectors. In addition, the determinants of IIT are investigated using a Tobit regression model. The results indicate that ASEAN and the high-income countries in East Asia exhibit the highest levels of IIT, followed closely by China and India. R&D spending, openness, and a higher share of manufactured exports were found to promote IIT, while geographical distance and the difference in economic size had an adverse effect, especially for manufactured goods. The ASEAN free trade area was most prominently associated with IIT across all SITC categories. Central and South Asian regional trade agreements had a positive influence on IIT in primary products.     

International trade and economic growth: evidence from a panel ARDL-PMG approach

The purpose of this work is to study the impact of trade openness on the economic growth of the countries bordering the Mediterranean using a panel of eight countries from 1975 to 2016. We apply ARDL panel which is a technique recently developed. We study the effects of openness to international trade on economic growth while incorporating economic policy variables. The results show that the variables of commercial and financial openness favor economic growth. The free trade agreements that the European Union has signed with certain countries in the Mediterranean basin are designed above all to encourage greater regional economic integration and an increase in their potential growth. Therefore, our findings show that the financial sector is slow to affect economic growth in these countries. This study reveals that human capital and the investment rate support the economic growth of our sample. In addition, we conclude that a process of economic convergence has begun in these countries. A causal analysis was carried out we found an unidirectional causality ranging from economic growth to trade openness.

     

Trade Agreements and Economic Growth

This article studies the growth effects of regional trade agreements (RTAs), taking into account the World Trade Organization (WTO) participation of RTA members. Assuming smaller preference margins of RTAs for WTO members than for nonmembers, I show in a model a stronger growth effect of RTAs for non‐WTO members than the effect for WTO members. Based on a comprehensive set of 270 RTAs and a large panel data set over the period of 1960–2007, the regression results show that RTAs promote growth for non‐WTO members, while their growth effect is weaker and often insignificantly different from zero for WTO members. This implies that, so far, the complementarity between the two approaches of trade liberalization in promoting economic growth is limited.     

Immigrant Specificity and the Relationship between Trade and Immigration: Theory and Evidence

Studies routinely document that immigrant employment concentrates in non‐traded goods sectors and that many immigrants have low inter‐sectoral mobility. We consider these observed characteristics of immigrant employment with regard to the question of how immigration affects a nation's pattern of production and trade. We model an economy producing three goods; one is non‐traded. Domestic labor and capital are domestically mobile but internationally immobile. Allowing that some new immigrants will become specific to the non‐traded goods sector, the model indicates that the effects of immigration on output and trade depend importantly on the sectoral pattern of employment of both new and existing immigrants. Empirical investigation in a panel data set of OECD countries supports the model's prediction that immigration raises the output of non‐traded goods. Consistent with the model, we also find that immigration and trade are complements. Given its empirical support, the model's implications for immigration policy are then discussed.     

Bilateral Trade Performance in West Africa: A Gravity Model Estimation

This study provides empirical insights on the functioning of regional trade agreements within the Economic Community of West African States (ECOWAS) by identifying bilateral trade barriers that affect the extent of trade flows among member countries. Also, it highlights some trade barrier indicators that are rarely covered in extant studies, such as the multilateral resistance term, the extent of trade complementarity, and the presence of economic integration agreements among ECOWAS member countries. We then provide augmented gravity model estimation on the determinants of bilateral trade in the region. We find, among other things, that trade complementarity had a positive and significant effect on bilateral trade within the sub‐region region. Other important determinants of intra‐regional trade include multilateral trade resistance and economic integration agreements — meaning that countries with some kind of agreement like the West African Economic and Monetary Union (WAEMU) tend to trade more among themselves than other member countries.     

Dynamic estimation of the relationship between trade openness and output growth in Asia

This paper studies the relationship between trade openness and output growth for a sample of twenty-three Asian countries using both a static OLS and a dynamic ECM estimation models. At the country specific level, the findings of this study provide robust empirical evidence indicating that higher revealed trade openness is not the main engine explaining the Asian economic-growth miracle. In particular, the authors find that physical capital accumulation is at the core of the observed long-run output per worker growth. At the regional level, the authors observe a marked difference between the pre and post 1997–1998 financial crisis, whereas, in the post period, trade openness has a positive and significant effect on output growth. In general, the results from the dynamic estimations prove that the conventional OLS static estimates underestimate the effect of investment on output growth. In addition, the dynamic model allows for a separation of gains from trade between short term and long term. The paper results also provide evidence in support of the idea that, countries with a growing degree of trade openness may experience faster per-capita output growth through gains in productivity associated to capital accumulation, rather than the assumed technological spillover effects from the trading sector. Again, at the regional level in the post financial crisis period both short term and long term gains from trade are relevant to growth. Why more trade does not necessarily imply faster growth at all levels of revealed trade openness growth, remains a conundrum.     

Remedy or Poison: Impacts of China's Outward Direct Investment on Its Exports

During the past decade, China's outward direct investment (ODI) and exports have experienced rapid growth, drawing increasing attention to the relationship between them. Using the gravity model based on panel data on China's ODI and trade to 174 countries and regions during 2003–2012, the present paper investigates the impacts of China's ODI on exports. We find that China's ODI to a host country significantly promotes China's trade with that economy: a 10‐percent increase in ODI stock can lead to a 2.14‐percent increase in exports, a 2.07‐percent increase in imports and a 2.87‐percent increase in net exports. The scale of the host country's economy, its infrastructure and its distance to China also have significant impacts on China's exports. Therefore, growth in ODI will facilitate China's trade and integration into the global economy, and enhance industrial upgrading in China by transferring the low‐end industries abroad.     

THE RELATIONSHIP BETWEEN TOURISM AND TRADE IN SOUTH AFRICA

This article explores the relationship between tourist arrivals and trade in South Africa. Two analyses were conducted – a panel data analysis, which included tourism and trade data of 40 countries with South Africa, and a time‐series analysis that involved South Africa's main tourism and trade partners. Cointegration tests, Granger causality and Block exogeneity tests were used to investigate the nature of the relationship. The results of the panel data analysis show that for South Africa as a whole, there is indeed a long‐term relationship between tourist arrivals and trade, and that bidirectional causality exists. The results for the country case studies are mixed, although the evidence is stronger for the hypothesis that tourism causes trade.     

东道国基础设施质量对中国进出口贸易的影响——基于“一带一路”沿线51个国家的实证分析

基础设施建设是经济社会发展的重要支撑,对国家经贸关系进一步发展具有桥梁作用。基于“一带一路”沿线51个国家2011—2019年面板数据,构建拓展引力模型实证分析东道国基础设施质量分别对中国进口与出口的影响。研究发现：东道国基础设施质量会显著促进中国的进口与出口贸易,但对中国进口贸易促进作用强于出口,且东道国GDP增长促进了中国进口与出口贸易增加,其对中国进口贸易促进作用大于出口;而东道国与中国的地理距离对中国进口贸易限制作用大于出口,东道国与中国为邻国、与中国具有共同语言及签订自由贸易协定会推动中国对其进出口贸易增长。在此基础上,提出促进中国与沿线国家进出口贸易的对策建议。     

The impact of trade facilitation factors on South Africa's exports to a selection of African countries

Economic growth can be enhanced through increased trade among countries, provided the correct institutional structures are in place. A country's trade is dependent not only on its own trade facilitation reforms but also on those of the trading partners. This paper, using an augmented gravity model, examines trade facilitation factors that impact on South Africa's exports to other selected African countries. The results of the estimation reveal the following. An improvement in the customs environment within the importing country provides the largest gain in terms of increasing trade flows, followed by the regulatory environment and domestic infrastructure. Furthermore, adjacency and common language impact positively on South African exports, while distance between countries impacts negatively on it. Being part of the Southern African Development Community is also enhancing exports from South Africa, compared with being part of the East African Community.     

Firm-level Utilization Rates of Regional Trade Agreements: Importers’ Perspective

This study provides evidence of firm-level utilization of regional trade agreements (RTAs) using transaction-level import data for Thailand. Two stylized facts are presented: some firms use RTA schemes in imports from RTA partner countries, whereas others do not; among firms that import from RTA partner countries under RTA schemes, some use RTA schemes for all transactions but others use them only for some transactions. To interpret these observations, we focus on the role of importers’ demand size. Specifically, we reveal that import firm-product-level RTA utilization rates are higher for larger-size importers in terms of demand, indicating that the difference in the share of utilization of RTA schemes across importers stems from the difference in the importers’ demand size. We also find that the utilization rates are higher when the preference margin, defined as most-favored-nation tariff rate minus RTA rate, is larger.     

Institutional Quality and CO2 Emission–Trade Relations: Evidence from Sub‐Saharan Africa

This paper examines the roles of trade, institutional quality and their interactions in explaining carbon dioxide emissions in a panel sample of 40 Sub‐Sahara African countries using the system generalised method of moments. We find that institutional reforms are unequivocally environmental improving. Meanwhile, the impacts of trade on the environment tend to depend on the institutional setting of a country. More specifically, trade openness is harmful to the environment in countries with low institutional quality and beneficial to the environment in countries with high institutional quality. This means that institutional reforms are a perquisite for the countries with low institutional quality to actualise the beneficial environment effect of trade. As for the countries with adequate institutional quality, trade and institutions are reinforcing each other in bringing down pollution. From these results, we conclude that trade openness implemented in a sound institutional setting potentially brings better trade, more growth and better environment.     

Economic integration in northeast Asia: Preconditions and possible trajectories

When in November 2001, the leaders of the Southeast Asian and Northeast Asian states met for the “ASEAN (Association of South East Asian Nations) plus three (China, Japan and Korea),” President Kim Dae‐Jung of South Korea proposed the exploration for an East Asian Free Trade Area (EAFTA) and thereby opened a new chapter of East Asian integration. The special Northeast Asian perspective on regional co‐operation became clear by the simultaneous decision to hold annual meetings of finance and trade ministers of China, Japan and Korea. At the same time, bilateral agreements, like a free trade area between Japan and Singapore, the tentative large free trade area between ASEAN and China and the work‐in‐progress on a Korean‐Japanese Free Trade Area, show the devotion and sometimes even obsession of current policy‐making with reaching regional trade agreements. Regional integration, it seems, is finally on the Northeast Asian agenda. In this paper, the preconditions and perspectives of economic integration in Northeast Asia will be explored. Since economic integration is in various ways linked to political factors, the second section discusses the geo‐political situation of Northeast Asia today. The third section deals with the economic perspectives of different forms of trade integration, followed by an analysis of various attempts for greater macro‐economic and financial co‐operation and a short conclusion.