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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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References

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  1. Lee, Jong-Wha & Shin, Kwanho, 2006. "Does regionalism lead to more global trade integration in East Asia?," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 283-301, December.
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  3. Ornelas, Emanuel, 2005. "Trade creating free trade areas and the undermining of multilateralism," European Economic Review, Elsevier, vol. 49(7), pages 1717-1735, October.
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  9. Baldwin, Richard E., 2007. "Managing the Noodle Bowl: The Fragility of East Asian Regionalism," Working Papers on Regional Economic Integration 7, Asian Development Bank.
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  14. Antoni Estevadeordal & Caroline Freund & Emanuel Ornelas, 2008. "Does Regionalism Affect Trade Liberalization Towards Non-Members?," CEP Discussion Papers dp0868, Centre for Economic Performance, LSE.
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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. Xuepeng Liu & Emanuel Ornelas, 2013. "Free Trade Agreements and the Consolidation of Democracy," CESifo Working Paper Series 4103, CESifo Group Munich.
  2. Fugazza, Marco & Nicita, Alessandro, 2011. "Measuring preferential market access," MPRA Paper 38565, University Library of Munich, Germany.
  3. Richard Baldwin, 2010. "Unilateral Tariff Liberalisation," NBER Working Papers 16600, National Bureau of Economic Research, Inc.
  4. 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.
  5. Urban Sila, 2009. "Can Family-Support Policies Help Explain Differences in Working Hours Across Countries?," CEP Discussion Papers dp0955, Centre for Economic Performance, LSE.
  6. Pramila Crivelli, 2012. "Regionalism and Falling External Protection in High and Low Tariff Members," Research Papers by the Department of Economics, University of Geneva 12071, Département des Sciences Économiques, Université de Genève.
  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. 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.
  9. Marco Fugazza & Alessandro Nicita, 2011. "On The Importance Of Market Access For Trade," UNCTAD Blue Series Papers 51, United Nations Conference on Trade and Development.

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