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In Search of Optimised Regional Trade Agreements and Applications to East Asia

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  • Hongshik Lee
  • Innwon Park

Abstract

We quantitatively analyse the trade effects of enhanced trade facilitation with extended gravity equations. Our findings confirm that RTAs comprised of countries equipped with better trade facilitation are more likely to be trade‐creating, less likely to be trade‐diverting, and are thus more likely to lead the world economy toward global free trade. We also find that (i) the traditional gains from shallow integration through eliminating tariff barriers will be greater for South‐South RTAs in East Asia such as an ASEAN‐China RTA, provided that the tariff‐reducing schedule is strictly fulfilled, (ii) the gains from deeper integration through enhancing trade facilitation will be greater for North‐North RTAs in East Asia such as a Japan‐Korea RTA, and (iii) the gains from a combined trade liberalisation strategy through tariff reductions and enhanced trade facilitation will be greater for North‐South RTAs in East Asia such as a China‐Korea and an ASEAN+3 RTA.

Suggested Citation

  • Hongshik Lee & Innwon Park, 2007. "In Search of Optimised Regional Trade Agreements and Applications to East Asia," The World Economy, Wiley Blackwell, vol. 30(5), pages 783-806, May.
    • Handle: RePEc:bla:worlde:v:30:y:2007:i:5:p:783-806
    DOI: 10.1111/j.1467-9701.2007.01024.x
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    2. Maria Persson, 2013. "Trade facilitation and the extensive margin," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(5), pages 658-693, August.
    3. Persson, Maria, 2012. "From trade preferences to trade facilitation: Taking stock of the issues," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 6, pages 1-33.
    4. Bourdet, Yves & Persson, Maria, 2011. "Reaping the Benefits of Deeper Euro-Med Integration Through Trade Facilitation," Working Paper Series 881, Research Institute of Industrial Economics.
    5. Claudio Candia Campano & Medardo Aguirre González & Lilliam Antón López & Javier Beltrán Valdebenito, 2018. "A gravity model of trade for Nicaraguan agricultural exports," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 37(74), pages 391-428, July.
    6. Alen Host & Helga Pavliæ Skender & Petra Adelajda Zaninoviæ, 2019. "Trade Logistics – the Gravity Model Approach," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 37(1), pages 327-342.
    7. A Salim, Ruhu & Mahfuz Kabir, Mohammad, 2011. "Does More Trade Potential Remain in Arab States of the Gulf ?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 26, pages 217-243.
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    9. Mitik, Lulit & Decaluwé, Bernard, 2008. "The impact of trade on female labor and girls’ education in South Africa: a CGE analysis," Conference papers 331785, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Claudio Candia Campano & Medardo Aguirre González & Lilliam Antón López & Javier Beltrán Valdebenito, 2018. "A gravity model of trade for Nicaraguan agricultural exports," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 37(74), pages 391-428, July.
    11. My Duong & Mark J. Holmes & Anna Strutt & Steven Lim, 2019. "Effects of Trade Agreements and Foreign Direct Investment on Trade: Evidence from Vietnam," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 116-126.
    12. Ragoobur, Verena Tandrayen & Tengur, Neha Devi & Seewooruttun, Bhooteshta, 2021. "South-South Trade: The Potential for Mauritius," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 46(3), pages 45-65, September.
    13. Yves Bourdet & Maria Persson, 2014. "Expanding and Diversifying South Mediterranean Exports through Trade Facilitation," Development Policy Review, Overseas Development Institute, vol. 32(6), pages 675-699, November.
    14. David Robinson, 2015. "The Long-term Outlook and Risks in Advanced Countries," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 7(2), pages 150-178, May.
    15. Persson, Maria, 2008. "Trade Facilitation and the Extensive and Intensive Margins of Trade," Working Papers 2008:13, Lund University, Department of Economics.

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