Abstract
The ASEAN Free Trade Area (AFTA) began in 1993. The hope of this agreement was that intra-ASEAN trade to grow rapidly turned out to be slow. Based on data from the ASEAN Secretariat in 2016, intra-ASEAN trade experienced a slow journey in the range of 20-24 percent over the past few years. This study empirically analyzed the influence of AFTA on Indonesia's trade structure towards ASEAN using TSI, GL / IIT, and CTB index. In the period of 2012-2017 Indonesia's trade balance against ASEAN suffered a loss. Despite the loss, there was a decrease in trade balance losses from 2015-2017 (after AFTA). To analyze trade there are 10 commodity classifications determined by SITC revision 3. Based on the results of the TSI analysis, there is a specialization of 6 commodities trading which have high export power. The CTB analysis is only commodities of Chemicals and related products, n.e.s, which contribute positively to Indonesian trade. For IIT analysis there are 4 commodities where the average IIT index increases after the AFTA agreement.Keywords: ASEAN, Trade, AFTA, IIT, TSI, CTBJEL Classification: F180, F140, F130
Highlights
Asean Trade Agreement (AFTA) is a comprehensive world-class bilateral agreement thatsubstantially liberalizes trade between ASEAN countries
This study empirically analyzes the influence of ASEAN Free Trade Area (AFTA) on Indonesia’s trade structure towards ASEAN using Trade Specialization Index (TSI), GL / Intra-Industry Trade (IIT), and CTB index. It evaluates the comparative advantage of industrial or product exports and its competitiveness by TSI, measures the intra-industrial trade ofindividual products or goods that show export potential at the macroeconomic level and the difference between the industry trade balance and the same industrial trade by GL and IIT and measure the contribution to the national trade balance made by industry by CTB
This paper examines which products /industries contribute to the trade balance of the two countries in such agreements
Summary
Asean Trade Agreement (AFTA) is a comprehensive world-class bilateral agreement thatsubstantially liberalizes trade between ASEAN countries. If the TSI index is bigger, it means having strong competitiveness and if the value is 0 means that the number of exports equal to imports translatesto the reality of the activity of intra-industrial trade. If it appears between -1 and 0, thatmeans the level of import specialization is high. CTB> 0 means that the actual surplus is higher than expected or the trade deficit is relatively lower than expected, and the industry or commodity group contributes positively to the overall trade balance This in the real sense means it is a comparative advantage in trade. This in the real sense shows that there is a comparative loss for trading
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