JCI-JSC-WP-2019-02: FTA Utilisation and Impact of Regional Trade Agreements on Trade of ASEAN and Australia: AANZFTA

by: Shandre THANGEVALU (JCI), Dionisius NARJOKO (ERIA), Shujiro URATA (ERIA, Waseda University)

JCI-JSC-WP-2019-02, July 2019.

In this paper, we examine the impact of ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) on Australian trade and in particular on imports from ASEAN member countries to Australia. This paper explicitly examines the FTA utilisation (AANZFTA) by ASEAN countries (10 ASEAN countries) at 6 digit-trade classification from 2012-2016 using Australian customs data. We implement the Hayakawa and Shiino (2018) model of FTA utilisation based on preferential tariff margin. The study accounts for both multilateral and bilateral FTAs across the countries in study. The result indicate that the preferential margin is positive indicating positive impact on FTA utilisation. However, the results also indicate that the utilisation rates of AANZFTA are low across the ASEAN countries as compared to bilateral FTAs in Malaysia, Thailand and Singapore. We also found exporting effects in Indonesia, Malaysia, Philippines and Vietnam. The learning-effects of using FTAs are also strong in our study. We also found evidence of co-sharing rule in the FTA tends to increase the utilisation of FTAs.

Key words: preferential tariffs – trade liberalisation – preference erosion
JEL classification: F13, F15, F53

Read Full Working Paper Here (20 pages, 0.9MB)