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The ASEAN free trade agreement : impact on trade flows and external trade barriers

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  • Calvo-Pardo, Hector
  • Freund, Caroline
  • Ornelas, Emanuel

Abstract

Using detailed data on trade and tariffs from 1992-2007, the authors examine how the ASEAN Free Trade Agreement has affected trade with nonmembers and external tariffs facing nonmembers. First, the paper examines the effect of preferential and external tariff reduction on import growth from ASEAN insiders and outsiders across HS 6-digit industries. The analysis finds no evidence that preferential liberalization has led to lower import growth from nonmembers. Second, it examines the relationship between preferential tariff reduction and MFN tariff reduction. The analysis finds that preferential liberalization tends to precede external tariff liberalization. To examine whether this tariff complementarity is a result of simultaneous decision making, the authors use the scheduled future preferential tariff reductions (agreed to in 1992) as instruments for actual preferential tariff changes after the Asia crisis. The results remain unchanged, suggesting that there is a causal relationship between preferential and MFN tariff reduction. The findings also indicate that external liberalization was relatively sharper in the products where preferences are likely to be most damaging, proving further support for a causal effect. Overall, the results imply that the ASEAN agreement has been a force for broader liberalization.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4960.

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Date of creation: 01 Jun 2009
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Handle: RePEc:wbk:wbrwps:4960

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Keywords: Free Trade; Trade Policy; Trade Law; Trade and Regional Integration; International Trade and Trade Rules;

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  1. Caroline Freund & Emanuel Ornelas, 2009. "Regional trade agreements," LSE Research Online Documents on Economics 28697, London School of Economics and Political Science, LSE Library.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Trade agreements from the bottom-up
    by Pierre-Louis in Rigotnomics on 2009-09-09 17:51:00
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Cited by:
  1. Marco Fugazza & Alessandro Nicita, 2011. "On The Importance Of Market Access For Trade," UNCTAD Blue Series Papers 50, United Nations Conference on Trade and Development.
  2. Xuepeng Liu & Emanuel Ornelas, 2013. "Free trade agreements and the consolidation of democracy," LSE Research Online Documents on Economics 48927, London School of Economics and Political Science, LSE Library.
  3. Jin, Seung Ha, 2013. "The Effect of South Korean FTAs on Trade: Country-level and Industry-level Analyses," Master's Theses 149430, University of Minnesota, Department of Applied Economics.
  4. Baldwin, Richard, 2010. "Unilateral tariff liberalisation," CEPR Discussion Papers 8162, C.E.P.R. Discussion Papers.
  5. Pierre-Louis Vézina, 2010. "Race-To-The-Bottom Tariff Cutting," IHEID Working Papers 12-2010, Economics Section, The Graduate Institute of International Studies, revised Jul 2010.
  6. Tobias Ketterer & Daniel M. Bernhofen & Chris Milner, 2012. "Preferences, Rent Destruction and Multilateral Liberalisation: The Building Block Effect of CUSFTA," CESifo Working Paper Series 3985, CESifo Group Munich.
  7. Ahmed, Saira & Ahmed, Vaqar & Sohail, Safdar, 2010. "Trade agreements between developing countries: a case study of Pakistan - Sri Lanka free trade agreement," MPRA Paper 29209, University Library of Munich, Germany.
  8. Urban Sila, 2009. "Can Family-Support Policies Help Explain Differences in Working Hours Across Countries?," CEP Discussion Papers dp0955, Centre for Economic Performance, LSE.
  9. Pramila Crivelli, 2012. "Regionalism and Falling External Protection in High and Low Tariff Members," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 12071, Institut d'Economie et Econométrie, Université de Genève.
  10. Fugazza, Marco & Nicita, Alessandro, 2013. "The direct and relative effects of preferential market access," Journal of International Economics, Elsevier, vol. 89(2), pages 357-368.
  11. Elshennawy, Abeer, 2013. "The Euro-Mediterranean free trade agreement and the cost of tariff liberalization in Egypt," Journal of Policy Modeling, Elsevier, vol. 35(2), pages 326-338.

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