Sunday, August 23, 2015

Free Trade 51, SEANET paper on unilateral trade liberalization in the ASEAN

The South East Asia Network for Development (SEANET) published its second issue of Perspectives or policy note this year, 20 pages long. Incidentally, it was written by yours truly.

Free trade has many variants like bilateral free trade agreement (FTA) or economic partnership agreement (EPA), regional (ex. ASEAN FTA or AFTA), cross regional (ex. RCEP, TPP), multilateral/global (ex. WTO negotiations), or plain unilateral, one-way free trade policy. This paper discusses the latter.

It starts with some basic theory, from the classical David Ricardo theory of comparative advantage, to commodity (CPE) and factor price equalization (FPE). Here, CPE an illustration of CPE.

Through time, the average ASEAN Trade in Goods Agreement (ATIGA) rates have been declining. Singapore and Brunei were the pacesetters of zero tariff policy since the past one or two decade/s. The intra-ASEAN rates of almost zero tariff are shown in the chart below.

The most common non-tariff barriers (NTBs) to trade are technical regulations on quality standards and non-automatic licensing of exports/imports permit. But there is one NTB that is lesser discussed -- the various trade and business bureaucracies. The Philippines was 5th in the ASEAN in this aspect.

Another annual report on economic freedom worldwide is the Economic Freedom of the World (EFW) report by Fraser Institute in Canada. Here is the result for  the ASEAN in area or section 4 of  the report.

See the 20-pages paper why unilateral trade liberalization is feasible for the ASEAN member-countries.

See also:

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