Go with the Gang, ASEAN!

This study investigates the unexplored trade potentials and the economic impacts of bilateral free trade agreements (FTAs) between ASEAN-5 member countries (Indonesia, Malaysia, Philippines, Singapore, and Thailand) and the seven-candidate FTA partners (Australia, India, Japan, New Zealand, South Korea, and the United States.) By using the gravity model and the Computable General Equilibrium (CGE) model, this study suggests the strategic FTA partners of ASEAN-5: ASEAN plus 3 FTA, ASEAN-China FTA, ASEAN-US FTA, ASEAN-Japan FTA, and ASEAN-India FTA. Moreover, this study shows that ASEAN-5 would achieve more benefits from the FTAs if they fully liberalized trade among themselves partly due to less trade diversion, better resource allocation, and terms-of-trade effect improvement. The results clearly indicate the potential gains from the intra-regional free trade, and point towards the importance of the ASEAN regional cooperation.