The effect of European integration on trade with the APEC countries: 1981–2000

Abstract

This study examines whether the European Union (EU) integration has resulted in significant trade decrease with the three Asia-Pacific Economic Cooperation (APEC) sub-groups during 1981–2000: NAFTA, ASEAN, and NIC. To include all the trade data including those with zero data values, this study estimates the modified gravity model using the scaled ordinary least squares method. First, as expected, the EU countries have reduced trade with all three sub-groups, especially during 1996–2000. However, the ASEAN countries maintain a stable level of trade growth with the EU countries. Second, the results indicate that the EU, ASEAN, and NIC countries trade significantly more among themselves due to their respective integration schemes. (JEL F20, F100)