THE EFFECTS OF ASEAN-CHINA FREE TRADE AGREEMENT ON BILATERAL TRADES

Wong, Colin Koh-King and Liew, Venus Khim-Sen and Mohammad Affendy, Arip (2021) THE EFFECTS OF ASEAN-CHINA FREE TRADE AGREEMENT ON BILATERAL TRADES. JOURNAL OF SOUTHWEST JIAOTONG UNIVERSITY, 56 (2). pp. 249-256. ISSN 0258-2724

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Abstract

This article adopts the augmented versions of the Gravity Model to examine the effects of the signing of the ASEAN-China Free Trade Agreement (ACFTA) on the bilateral aggregate trades. Specifically, ACFTA dummy variables are incorporated in the basic model is to estimate the direction and magnitude of the ACFTA effects. A total of 79 trading partners of ASEAN member countries plus China were examined in this article. The study finds that the Gross Domestic Product, population, natural endowment, distance, and common language are the main determining factors of the bilateral trade for ASEAN member countries and their trading partners. Estimated results from this Augmented Gravity Model showed that ACFTA had increased the bilateral aggregate trades not only between intra-bloc member countries but also intra-bloc and extra-bloc countries. With this positive finding, ASEAN and China could consider expanding their free trade area to a broader regional perspective, enhancing economic growth and reducing regional inequality.

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