A Quantitative Survey of the Economics of ASEAN-U.S. Free Trade Agreements

This paper considers the quantitative effects of the proposed series of bilateral free trade agreements (FTAs) between the United States and qualifying ASEAN countries under the rubric of the "Enterprise for ASEAN Initiative" (EAI). The study uses several techniques to gauge the economic effects of the EAI, including: (1) an augmented gravity model to ascertain whether or not these FTAs would constitute a "natural" economic bloc; (2) a summary of the results of a computational general equilibrium (CGE) model; and (3) a novel disaggregated technique to anticipate the economic effects at the product level. All three exercises suggest that the EAI will generate overall positive economic effects for all partners. The study also uses two export-structure similarity techniques to show that intra-ASEAN export competition in the U.S. market is fairly high in certain cases, especially Malaysia–Singapore, but ASEAN countries (besides Singapore) actually compete more with China than each other. These results underscore the importance of a comprehensive EAI agreement in order to prevent trade diversion against individual ASEAN partners, as well as suggesting that the EAI might give the region a competitive edge over its key non-regional competitor (China).