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The Impact of AFTA on Intra-AFTA Trade

Author

Listed:
  • Shujiro URATA

    (Economic Research Institute for ASEAN and East Asia)

  • Misa OKABE

    (Wakayama University, Japan)

Abstract

ASEAN countries have liberalized 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 liberalization 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. We also find 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, but 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.

Suggested Citation

  • Shujiro URATA & Misa OKABE, 2013. "The Impact of AFTA on Intra-AFTA Trade," Working Papers DP-2013-05, Economic Research Institute for ASEAN and East Asia (ERIA).
  • Handle: RePEc:era:wpaper:dp-2013-05
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    References listed on IDEAS

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    Cited by:

    1. Ponciano INTAL Jr, 2015. "AEC Blueprint Implementation Performance and Challenges: Trade Facilitation," Working Papers DP-2015-41, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Vaishnavi venkatesh & Ranajoy Bhattacharyya, 2014. "The ASEAN Free Trade Agreement:How Effective?," Working Papers 1425, Indian Institute of Foreign Trade.
    3. Ramstetter, Eric D. & Archanun, Kohpaiboon, 2015. "The Effects of the ASEAN Economic Community 2015 on Industries in Kitakyushu and Shimonoseki," AGI Working Paper Series 2015-04, Asian Growth Research Institute.
    4. repec:eaa:aeinde:v:17:y:2017:i:2_10 is not listed on IDEAS
    5. Medalla, Erlinda M. & Mantaring, Melalyn C., 2017. "Review of Intra-ASEAN Nontariff Measures on Trade in Goods," Discussion Papers DP 2017-18, Philippine Institute for Development Studies.

    More about this item

    Keywords

    ASEAN Free Trade Area; Intra-regional trade; Gravity model; Trade creation effect.;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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