ASEAN-China Free Trade Agreement Research Articles

Increased Competitiveness of Indonesia's Rubber Rubber Exports After The Enactment of ACFTA (Asean-China Free Trade Agreement)

The ASEAN-China Free Trade Agreement (ACFTA), which came into effect in January 2010, aims to increase economic cooperation and remove trade barriers. However, the value of Indonesia's rubber exports decreased significantly after the implementation of this agreement. This study uses the gravity model and Revealed Trade Advantage (RCTA) method to analyze the factors affecting the decline in the value of Indonesia's rubber exports. The data used covers the period 2001-2022 and is taken from various sources including TradeMap and interviews with rubber exporters. Findings show that the value of Indonesia's rubber exports to China and ASEAN countries has fluctuated, with a significant decline after 2011. Gravity model analysis shows that ASEAN-China real GDP growth is negatively related to the value of Indonesian rubber exports, while other factors such as exchange rates and commodity prices also play a role. The decline in Indonesia's rubber export competitiveness is not only caused by the implementation of ACFTA, but also by internal factors such as low productivity and underinvestment. Recommendations are given for commodity price adjustments to improve Indonesia's rubber export competitiveness.

Analisis terhadap Implementasi Hukum Dagang Internasional dalam Perdagangan Indonesia Studi Kasus pada Perjanjian Perdagangan Bebas Asean-China

The ASEAN-China Free Trade Agreement (ACFTA) has posed significant challenges, benefits, and impacts on Indonesia's trade. In terms of challenges, the implementation of ACFTA has introduced several obstacles, including intensified competition with imported products from China, which could threaten certain domestic industry sectors. The use of qualitative methods is relevant because of its focus on gaining a deep understanding of the implementation of international trade law in Indonesia, using ACFTA as a case study. The objective of this research is to understand how the implementation of International Trade Law, particularly in the context of the ASEAN-China Free Trade Agreement (ACFTA), influences Indonesia's trade policies. The outcomes of this research are strategic steps needed to maximize the benefits of free trade with ASEAN and China while safeguarding domestic industry interests. Successful regional economic integration will bring significant economic benefits to all involved parties and strengthen economic cooperation in Southeast Asia.

Trade creation and export diversion: Thailand’s plastic and rubber under the ASEAN-China free trade agreement

This study aims to investigate the impact of the ASEAN-China free trade agreement on plastic and rubber trading, focusing on trade creation and export diversion. The collected data include 11 intra-bloc countries and 23 extra-bloc countries from 1990 to 2021, analyzed using STATA17. The gravity model is applied to the international trade framework. First, the unit root test is used to confirm the stationary nature of the data. Then, the methods are compared, employing fixed effects and a robust Poisson maximum likelihood estimator. The bilateral dummy variables are used to estimate the directional impact of trade agreements on export volume. The result demonstrates that the ASEAN-China free trade agreement establishes trade creation and export diversion. It has had a positive impact on the export value of plastic and rubber in Thailand over the past 30 years, but in terms of trade creation is less than export diversion. This means that exporting plastic and rubber to extra-bloc countries will gain more benefits than trading with member countries under the ASEAN-China free trade agreement. However, trading under the ASEAN-China free trade agreement may continue, but export volumes of plastic and rubber will decline. According to the findings, it can be suggested that Thailand’s government has to have a comparative advantage in product and strong competitiveness. Meanwhile, the ASEAN-China free trade agreement should not only focus on trade tariffs but also improve customs clearance to reduce trade costs. AcknowledgmentI would also like to extend my thanks to my parents for their support and encouragement throughout my studies.

Assessing the economic impact and welfare effects of RCEP: A case study of Malaysia's progress in the ASEAN-China Free Trade Agreement

This paper employs the WITS-SMART model to analyze the potential impacts of the Regional Comprehensive Economic Partnership (RCEP) on specific industries in Malaysia and China. By modifying the Armington elasticity and the parameter ‘a’ in the Swiss formula, five distinct scenarios are established to simulate the effects of various tariff reduction schemes. The analysis reveals positive and significant overall trade effects. In a scenario of complete tariff elimination, Malaysia experiences higher trade and welfare effects compared to China, addressing the longstanding trade deficit between the two countries. Finally, recommendations are made to gradually reduce tariffs in stages and sectors, prioritize tariff reduction on specific goods, implement zero tariffs in China first, focus on products with international competitiveness, and address potential asymmetric industrial output effects.

Trade creation and trade diversion effects of ACFTA on seafood exports

The gravity model is an econometric model used an as effective tool to explain the volume and direction of bilateral trade between countries. It is widely used in international trade and thus, in this article, we use the gravity model to examine the trade creation and diversion effects of ASEAN-China Free Trade Agreement (ACFTA) for the seafood industry by estimating the gravity trade model for the time period between 2003 and 2020 and between 10 countries. Initially, the estimation applied panel data with ordinary least squares (OLS) estimation, but there was a problem with heteroscedasticity and autocorrelation using the OLS estimator. Therefore, we will re-estimate the model by using the fixed effects model (FEM) and random effects model (REM). We estimate twice, once with data including 2020 and once excluding 2020 to understand the impact of the COVID-19 pandemic on commercial trends. The estimated results show that trade creation influences seafood. It is possible that the COVID-19 pandemic has no impact on trade diversion and creation, or that the 2020 data is too short for us to assess this impact. In conclusion, this article has achieved certain success in explaining the causes affecting trade flow in processed goods due to differences between the general tariff rate and the preferential tariff rate for ASEAN - Chinese seafood, and the close distance between commercial partners and converting certificate of origin (C/O) of goods to export. Analysis using the gravity model shows a positive impact on Vietnam's seafood trade flow when joining ACFTA.

PENGARUH EKSPOR, IMPOR, INFLASI, DAN KEBIJAKAN ACFTA TERHADAP CADANGAN DEVISA ASEAN-5 PERIODE 2005 – 2019

To overcome obstacles in international trade, several countries have made bilateral and multilateral agreements that can benefit both parties, one of which is the ASEAN – China Free Trade Agreement (ACFTA). State foreign exchange is one source of foreign trade financing. Several factors that affect foreign exchange reserves are export and import activities, and inflation. With the ACFTA policy, it is expected to facilitate international trade activities in ASEAN-5 countries so as to increase the growth of the country's foreign exchange reserves. The purpose of this study is to analyze the effect of exports, imports, inflation, and ACFTA policies on ASEAN-5 foreign exchange reserves for the period 2005 – 2019. The analysis is carried out using panel data regression, using secondary data sourced from the World Bank and the World Trade Organization. The results of the analysis show that exports, imports, inflation, and ACFTA policies simultaneously have a significant effect on foreign exchange reserves of ASEAN – 5. 2005-2019. The import variable (X2) partially has a positive and significant effect on foreign exchange reserves before and after the enactment of ACFTA in ASEAN-5 for the period 2005-2019. The inflation variable (X3) partially has a significant negative effect on foreign exchange reserves before and after the enactment of ACFTA in ASEAN-5 period 2005-2019. The ACFTA policy variable (D1) partially has a significant effect on foreign exchange reserves before and after the establishment of ACFTA in ASEAN-5 for the 2005-2019 period.

Bilateral Trade Analysis of ASEAN and China Countries in ACFTA Cooperation (Gr avity Model Approach)

At the end of 2001 ASEAN and China agreed on free trade in Bandar Sri Begawan, Brunei Darussalam, known as the ASEAN-China Free Trade Agreement (ACFTA). Periodically, ASEAN and China make agreements, one of the goals of which is to eliminate or cut barriers to trade in goods, both tariffs and non-tariffs. Under ACFTA, tariff reduction began in July 2005 and aims to cut import duties to zero by 2010 on about four thousand types of goods for the relatively developed ASEAN countries namely Thailand, Malaysia, Singapore, Indonesia, the Philippines and Brunei. The Gravity Model predicts trade based on distances and interactions between countries in terms of their economic size. The Gravity Model in economics imitates Newton's law of gravity which also takes into account the physical distance and size between two objects. The application of this model to explain economic phenomena regarding the interaction between the two countries has been widely carried out by economists. The study uses panel data from China and ASEAN6 in the 2010-2020 research period with ASEAN6 exports to China as the dependent variable, and the independent variables include the GDP of the destination country and the country of origin, economic distance proxied in the form of transportation tariffs, exchange rates and economic openness. Panel data regression analysis was used to see the effect of the independent variable on the dependent variable by determining the best model (common effect, fixed effect, random effect) and the classical assumption test performed was the multicollinearity test and the heteroscedasticity test. The results showed that the GDP of destination and origin countries, distance, and exchange rates significantly affected the export value of ASEAN6 to China. Meanwhile, economic openness has no significant effect on the value of ASEAN6 exports to China.

Bilateral Trade Analysis of ASEAN and China Countries in ACFTA Cooperation (Gr avity Model Approach)

At the end of 2001 ASEAN and China agreed on free trade in Bandar Sri Begawan, Brunei Darussalam, known as the ASEAN-China Free Trade Agreement (ACFTA). Periodically, ASEAN and China make agreements, one of the goals of which is to eliminate or cut barriers to trade in goods, both tariffs and non-tariffs. Under ACFTA, tariff reduction began in July 2005 and aims to cut import duties to zero by 2010 on about four thousand types of goods for the relatively developed ASEAN countries namely Thailand, Malaysia, Singapore, Indonesia, the Philippines and Brunei. The Gravity Model predicts trade based on distances and interactions between countries in terms of their economic size. The Gravity Model in economics imitates Newton's law of gravity which also takes into account the physical distance and size between two objects. The application of this model to explain economic phenomena regarding the interaction between the two countries has been widely carried out by economists. The study uses panel data from China and ASEAN6 in the 2010-2020 research period with ASEAN6 exports to China as the dependent variable, and the independent variables include the GDP of the destination country and the country of origin, economic distance proxied in the form of transportation tariffs, exchange rates and economic openness. Panel data regression analysis was used to see the effect of the independent variable on the dependent variable by determining the best model (common effect, fixed effect, random effect) and the classical assumption test performed was the multicollinearity test and the heteroscedasticity test. The results showed that the GDP of destination and origin countries, distance, and exchange rates significantly affected the export value of ASEAN6 to China. Meanwhile, economic openness has no significant effect on the value of ASEAN6 exports to China.

Indonesian Trade Deficit with China: Background and Grey Forecasting

Indonesia's trade balance with China has remained negative since 2010. The current study forecasts Indonesia's trade deficit with China for five years using the Even Grey Forecasting model EGM (1,1,α,θ). The sample was conducted by collecting the data of traded deficits for the past ten years. Data were collected from the official websites of Indonesia's Central Bureau of Statistics of (BPS), Ministry of Trade, among others. By building upon the literature, the study argues that trade deficits might have occurred from internal and external factors, such as the lack of infrastructure, the depreciation of the Rupiah (Indonesian currency) against the U.S. dollar, and the ASEAN-China Free Trade Agreement. Comparative analysis with Linear Regression (LR), Exponential Regression (ER), and Exponential Triple Smoothing (ETS) revealed the superiority of the grey forecasting model for trade deficit prediction. The study found that the trade deficit was minimum during the COVID-19 pandemic. It also showed an increasing trade deficit in the post-COVID period. The study concludes with some recommendations for Indonesia to minimize the trade deficit.

Development Of Business Intelligence On Enterprise Resource Planning For Business Small And Medium

Small and Medium Enterprises (SMEs) are business sectors that are the foundation of the real sector of the Indonesian economy.SMEs are currently experiencing considerable challenges both from the internal in the form of quality and continuity products and external challenges since the enactment of the ASEAN-China Free Trade Agreement (ACFTA), where automotive manufacturing products from China enter the Indonesian market freely. In the competition open and competitive like this, the use of information technology is an urgent need for SMEs to be able to compete and increase business capacity. Use of Enterprise Resource Planning (ERP) in the manufacturing sector SMEs, is an information system that supports daily transactions and operations in managing company resources in an integrated manner, including: funds, people, machinery, spare parts, time, material, capacity, even method. Cross-functional integration capabilities in ERP provide overview of the flow of information on people, goods and services in real time. But a manager companies need not only transactional information, but also require fast data easy to understand to support decision making. This study aims to develop an intelligence business application that is service-reusable for integration, analysis and monitoring the performance of an SME in the manufacturing industry sector. Application development starts with do analysis on transactional data, and do the design of analytic applications provide a decision-making process with time-based access from various data sources,use ETL (Extract-Transform-Load) and graphical data display. The final results of this study describe the relationship between BI processes and modules on ERP.

The Effects of ASEAN-China Free Trade Agreement on Bilateral Trades

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.

Environmental impact of ASEAN-China free trade agreement: A case of Indonesia palm oil industry 2005-2010

This research focused on the impact of the ASEAN-China Free Trade Agreement (ACFTA) on the environment of the Indonesian palm oil industry. The theory used in this research was trade liberalization impact with scale effect, composition effect, and technique effect as the variable to seek the environmental impact of trade liberalization. The method of this research used a qualitative approach and explanatory data analysis technique. This research indicates that ACFTA has a positive impact on the member states’ economy. However, on the other hand, ACFTA has a negative impact on the environment because of deforestation and increased carbon emissions. Deforestation and increased carbon emission are caused by the expansion of palm land area, which is encouraged by the escalation in demand for palm oil products in the free trade area.

The Determinant Effect of ACFTA on Palm Oil Trade Between China and Indonesia

This research determines the effect of the ASEAN-China Free Trade Agreement (ACFTA) on the palm oil trade between China and Indonesia. This study discusses the analysis of the ACFTA and the effects on the economies of China and Indonesia. This research was analyzed using the gravity model and the analysis of the unit root test, lag selection criteria, co-integration, vector error correction model (VECM), long-run analysis test, short-run analysis test, and granger causality test using Eviews 8. The dependent variable used is palm oil export and independent variables include are Gross Domestic Product (GDP), Real Exchange Rate (RER), Foreign Direct Investment (FDI) and dummy variable (ACFTA) for both countries using data of 28 years (1990-2017). The case of China, the results shows that there is a long-run relationship between palm oil export with GDP, RER, FDI, and ACFTA and the palm oil export has a short-run relationship with GDP, FDI, and ACFTA, and palm oil export is showing causality with GDP, RER, FDI, ACFTA. Meanwhile, in the case of Indonesia, there is no long-run relationship between palm oil export with GDP, RER, FDI, and ACFTA but there is has a short-run relationship between palm oil export with GDP and palm oil export is showing causality with GDP, RER, and FDI. The implementation of ACFTA on palm oil trade between China and Indonesia have positive impacts on both countries and increase bilateral trade flows. Keywords: China, Indonesia, ACFTA, Palm oil, Gravity model. DOI: 10.7176/JCSD/58-04 Publication date: April 30 th 2020

THE IMPACT OF FREE TRADE BETWEEN ASEAN AND CHINA ON THE INDONESIAN HOUSEHOLDS

Free trade agreement between ASEAN and China was executed in early 2010. Various types of trade tariffs have been removed or lowered to support the agreement which may lead to changes in the welfare of Indonesian households. This research tries to find out the impact of ASEAN-China free trade agreement on the welfare of households in Indonesia. The model used for this analysis is AGEFIS model, a Computable General Equilibrium model of Indonesian economy. The findings of this research show that the free trade between ASEAN and China increases the level of economic activity. Various macroeconomic indicators such as output and exports increase relative to the output prior to the free trade agreement. Income of urban households rise but rural households are adversely affected. Skilled-workers benefits more than unskilled ones.

Indonesian Export Performance and Competitiveness in the ASEAN-China FTA

The ASEAN-China Free Trade Agreement (ACFTA) is a regional trade agreement that attracts the most attention among various FTAs between ASEAN and third parties. This study aims to analyze the influence of ACFTA on export performance and the competitiveness of Indonesian exports. The study revealed that (i) ASEAN-China FTA increased the penetration of Indonesian export products in the Chinese market, marked by the increasing number of sectors in the category of rising stars and lagging opportunities from 19 sectors before ACFTA to 52 sectors after 2010, (ii) similarity trade index between ASEAN and China since 2011 decreased sharply from 43 to 14 in 2016 indicating the export profile between ASEAN and China is increasingly divergent (increasingly dissimilar), and (iii) high competition between Indonesian and China export consistently decreased measured in similarity trade index from 69 in 2011 to 58 in 2016. Consequently, Indonesia's export development potential is still open to ASEAN and China (specifically to the ASEAN market) because 38 sectors of export are in the lost opportunity category and almost half (42%) of these sectors posses competitiveness (RCA> 1)

Impact of ASEAN-China free trade agreement in CO2 emission of marine transportation

World Summit and Sustainable Development (WSSD) agreed to link international trade with the environment from two aspects to realize sustainable development, namely, mutual support between trade, environment and development; and mutually beneficial between the multilateral trading system and multilateral environmental agreements. In the ASEAN-China Free Trade Agreement (ACFTA) that has been running since 2010, research was mostly focused on trade aspect. This study aims to evaluate CO2 emission from the marine transportation of trade, before and during ACFTA. The data was taken from the UNCTADSTAT, WITS, CEPII. By using the IATA standard of CO2 emissions i.e. 985.97g/ton-km from air transport, and 9.53g/ton-km of sea transport, the results showed that there was an increase 1.6 time in CO2 emissions from ASEAN-China trade transportation from period 2001-2009 (before ACFTA 2009) to period 2010-2018 during ACFTA.

Limits and Challenging Factors of the Dispute Settlement Mechanism in the Light of China- ASEAN Free Trade Agreement Perspective

The aim of this article is to understand the dispute settlement mechanism in the ASEANChina Free Trade Agreement, hereinafter ACFTA. The ACFTA consists of ten ASEAN members plus one, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), the Philippines, Singapore, Thailand, Vietnam and China. This article will present the current situation and motives behind China and the ASEAN’s Free Trade Area engagement. The ACFTA was signed in order to embrace the opportunities and face the challenges of being integrated into the region’s economy. One of the major limitations of ASEAN economic regulation, especially free trade regulation, is the ASEAN’s underdeveloped Dispute Settlement Mechanism (DSM). Interestingly, the number of cases that have arisen under the ACFTA is nil since its creation in 2005, which places the ACFTA DSM in doubt over its effectiveness. The legal problems regarding the China-ASEAN free trade area (FTA) will also be discussed in this article. Furthermore, this article focuses on what would be an appropriate DSM’s framework, and its legal issues concerning how the dispute settlement mechanism from the perspective of the ACFTA, should be developed in order to improve the China-ASEAN dispute resolution mechanism and facilitate legal research of countries in the region.

The Affect Of The Asean China Free Trade Agreement (Acfta) On The SME's Performance

This research is aimed to analyze the influence of ASEAN-China Free Trade Agreement (ACFTA) on the financial performance of SMEs in Sidoarjo. The financial performance of SMEs in this study was measured by the level of sales comparation between the period before and after ACFTA. This research applied mix method technique with squids mixed method strategy, especially sequential explanatory strategy. It is a strategy for the researchers to combine the data that was found from one method with the other method. The steps were begun with the researcher collecting the quantitative data by performing different test or Paired samples T-test then continued with collecting the qualitative data by doing library research. The results show that there are significant differences in financial performance; first, it is seen from the sales between before and after ACFTA, and second, it is proven that that the existence of ACFTA significantly affects the sales rate of SMEs.

TRADE AND ENVIRONMENT IN INDONESIA: CASE STUDY OF ASEAN-CHINA FREE TRADE AGREEMENT

In recent decades, the debate about the impacts of economic globalization through free trade has become attention to public policy. One important issue to address is related to environ­mental quality. It has been fifteen years since ASEAN-China Free Trade Agreement (ACFTA) was firstly signed and the total trade flows between ASEAN countries and China have grown around US$ 20 billion per year. Under the ACFTA commitment, tariff rates for exports from China to ASEAN countries have been reduced gradually and so have the tariff rates of ASEAN exports to China. This paper attempts to investigate whether expanded trade causes environmental damage in Indonesia. As the main largest economy in ASEAN, Indonesia has greatly contributed to the pollution released in ASEAN area. Using industrial pollution projection system developed by World Bank in 1995, it has been found that the estimated amounts of pollution have been in­creasing by approximately five times in Indonesia after fifteen years of ACFTA implementation. Even though the share of export of most polluting sectors has been decreasing, its contribution on the pollution intensity remains the largest. Since chemicals become the most polluting sector with its rapid growing in export to China, this sector needs to be considered in trade negotiations in order to lessen negative impacts of trade to the environment.

Volatility Dynamics in the ASEAN– China Free Trade Agreement

This study used three multivariate general autoregressive conditional heteroskedasticity models to analyze the volatility dynamics in the ASEAN–China Free Trade Agreement. Results indicated the presence of long-run persistence, wherein shocks in China’s stock market affect other ASEAN stock indices in the long term. Further tests revealed the presence of time-varying correlations, suggesting dynamic models, such as the dynamic conditional correlations model, are appropriate. The Baba, Engle, Kraft, and Kroner model determined that the conditional covariances of the Chinese and ASEAN indices are functions of their lagged covariances, further proving that China’s stock volatilities impact the volatilities of ASEAN counterparts. JEL Classification: C58, G15