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Trade creation and the status of FTAs: empirical evidence from East Asia

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  • Florian Mölders
  • Ulrich Volz

Abstract

East Asia has been considered a latecomer with respect to Free Trade Agreements (FTAs). Since the turn of the last century, however, FTAs with East Asian participation have seen an intra- and extra-regional expansion. Many trade initiatives have been proposed, negotiated or even implemented. This introduces interesting perspectives for the analysis of trade agreements regarding their anticipatory trade effects. This paper focuses on the trade impact of FTAs at different stages that East Asian economies participate in. The central part of this study is an econometric analysis that applies panel data to the gravity model of international trade flows. We augment the traditional model with variables to estimate trade effects of bilateral and multilateral agreements and year-to-year changes in the stages of their implementation. Our results reveal that there exist anticipatory effects preceding the actual implementation of bilateral FTAs with East Asian participation. Further, anticipation effects are larger for bilateral than for multilateral agreements, possibly because the realisation of bilateral agreements is considered more realistic.
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  • Florian Mölders & Ulrich Volz, 2011. "Trade creation and the status of FTAs: empirical evidence from East Asia," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 429-456, September.
    • Handle: RePEc:spr:weltar:v:147:y:2011:i:3:p:429-456
    DOI: 10.1007/s10290-011-0095-9
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    3. Claudia Canals & Michael A. Klein & Fuat Şener, 2023. "Intellectual property‐related preferential trade agreements and US offshoring to developing countries," Review of International Economics, Wiley Blackwell, vol. 31(4), pages 1442-1475, September.
    4. Stender, Frederik & Berger, Axel & Brandi, Clara & Schwab, Jakob, 2020. "The trade effects of the economic partnership agreements between the European Union and the African, Caribbean and Pacific group of states: Early empirical insights from panel data," IDOS Discussion Papers 7/2020, German Institute of Development and Sustainability (IDOS).
    5. Martínez-Zarzoso, Inmaculada & Voicu, Anca M. & Vidovic, Martina, 2020. "Production networks in Europe: A natural experiment of the EU enlargement to the east," University of Göttingen Working Papers in Economics 390, University of Goettingen, Department of Economics.
    6. Tristan Kohl, 2014. "Do we really know that trade agreements increase trade?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(3), pages 443-469, August.
    7. Frederik Stender & Axel Berger & Clara Brandi & Jakob Schwab, 2021. "The Trade Effects of the Economic Partnership Agreements between the European Union and the African, Caribbean and Pacific Group of States: Early Empirical Insights from Panel Data," Journal of Common Market Studies, Wiley Blackwell, vol. 59(6), pages 1495-1515, November.
    8. Brusselaers, Jan & Buysse, Jeroen, 2018. "Implementation of the EU-Cameroon Voluntary Partnership Agreement policy: Trade distortion, rent-seeking and anticipative behavior," Forest Policy and Economics, Elsevier, vol. 90(C), pages 167-179.
    9. Florian Mölders, 2012. "On the Path to Trade Liberalization: Political Regimes in International Trade Negotiations," Discussion Papers of DIW Berlin 1245, DIW Berlin, German Institute for Economic Research.
    10. Jayson Beckman & Munisamy Gopinath & Kamron Daugherty, 2021. "Options for ASEAN trade expansion: Within, plus three or six, European Union or the United States?," The World Economy, Wiley Blackwell, vol. 44(5), pages 1177-1204, May.
    11. Inmaculada Martínez‐Zarzoso & Anca M. Voicu & Martina Vidovic, 2020. "Production networks in Europe: A natural experiment of the European Union enlargement to the east," Review of International Economics, Wiley Blackwell, vol. 28(5), pages 1143-1163, November.

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    Keywords

    Free Trade Agreements; Trade; East Asia; Gravity model; Panel data; F13;
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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