Economic Impacts of ASEAN's Future Economic Integration through FTAs
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Abstract
This study examines the possible choices of the Association of Southeast Asian Nations (ASEAN) towards trade liberalization with other countries through reviewing the current trade policies in both national and regional prospects, and to estimate the impact on GDP of current and future ASEAN's trade agreements using Computable General Equilibrium (CGE) model. It is found that the ASEAN is likely to expand its economic bargaining power integrating in the regional and bilateral levels with four possible paths including the EU, Regional Comprehensive Economic Partnership (RCEP), Turkey, and Pakistan which the last two countries are negotiating the bilateral Free Trade Agreements (FTAs) with many countries in the ASEAN. Trade barriers, tariff and non-tariff issues, are likely to be eliminated gradually while many attractive foreign direct investment policies will be more active among all ten countries.
Additionally, the results from CGE model suggested that there is a mutual but unequal trade gain from the bilateral trade agreements under many possible scenarios. As expected, signing FTAs with the existing ASEAN's partners as Regional Comprehensive Economic Partnership (RCEP) is able to deliver the highest economic impact to the ASEAN members compared to other choices. Moreover, a removal of only tariff can generate tiny positive impact to negotiating countries. Thus, the next challenge is a reduction of non-tariff measures, for example, trade regulations and quotas, between ASEAN countries and its trading partners.
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