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Assessing the trade impacts of the ASEAN + 6 FTA for Lao PDR
Author(s) -
Suvannaphakdy Sithaxay,
Tang Hsiao Chink,
DiCaprio Alisa
Publication year - 2016
Publication title -
asian‐pacific economic literature
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.232
H-Index - 21
eISSN - 1467-8411
pISSN - 0818-9935
DOI - 10.1111/apel.12148
Subject(s) - bilateral trade , international trade , china , international economics , economics , endowment , regional trade , east asia , gravity model of trade , factor endowment , panel data , business , free trade , geography , comparative advantage , political science , archaeology , law , econometrics
Using an unbalanced panel dataset of bilateral exports from 1992 to 2009, we assess the potential trade impacts of the expansion of the Association of Southeast Asian Nations (ASEAN) to ASEAN + 3 and ASEAN + 6 on the Lao People's Democratic Republic (Lao PDR). It is found that bilateral exports are positively related to overall bilateral country size and similarity in country size but inversely related to the factor endowment differences, transportation costs, and import tariffs. Simulation results show that the formation of preferential trade agreements (PTAs) between ASEAN and the Plus‐6 economies (the People's Republic of China, Japan, and the Republic of Korea in East Asia; and the other three economies of Australia, India, and New Zealand) could increase bilateral trade between the Lao PDR and ASEAN + 6 by US$1 billion, and ASEAN + 3 by US$981 million. Nonetheless, the trade balance of the Lao PDR is likely to worsen in both the ASEAN + 3 and ASEAN + 6 PTAs because they stimulate more imports than exports.