The impact of AFTA on intra-AFTA trade |
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| Affiliation: | 1. Wakayama University, Sakaedani 930, Wakayama City 640-8510, Japan;2. Waseda University, 1-21-1 Nishiwaseda, Shinjuku, Tokyo 169, Japan;3. Economic Research Institute for ASEAN and East Asia (ERIA), Sentral Senayan II, 6th Floor Jalan Asia Afrika No. 8, Gelora Bung Karno, Senayan, Jakarta Pusat 10270, Indonesia;1. Banca di San Mario S.p.A., San Marino, Italy;2. Wilfrid Laurier University and CIGI, Canada;3. Agricultural Bank of China, China;4. CIGI and University of Waterloo, Canada;1. School of Finance, Zhongnan University of Economics and Law, Wuhan, PR China;2. Department of Commerce, Faculty of Management Sciences, University of Kotli, City Kotli, Azad Jammu and Kashmir 11100, Pakistan;3. Department of Business Management,College of Business and Economics, University of Johannesburg,South Africa;4. Department of Public Administration, Faculty of Management Sciences, University of Kotli, City Kotli, Azad Jammu and Kashmir 11100, Pakistan;5. School of Economics, Henan University, Kaifeng, PR China;1. Department of Business Administration, Ono Academic College, Israel;2. Department of Business Administration, Faculty of Management, University of Haifa, Israel |
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| Abstract: | ASEAN countries have liberalised 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 liberalisation 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. In addition, the analysis reveals 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, while 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. |
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| Keywords: | ASEAN Free Trade Area Intra-regional trade Gravity model Trade creation effect |
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