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Journal of Economic Integration 2021 September;36(3) :437-461.
DOI: https://doi.org/10.11130/jei.2021.36.3.437
Impact of FTA on Trade in ASEAN and Australia Using Customs Level Data

Shandre M. Thangavelu1,2 Dionisius Narjoko3 Shujiro Urata 4

1,2Sunway University, Malaysia
University of Adelaide, Australia
3Economic Research Institute for ASEAN and East Asia
4Waseda University, Japan
Corresponding Author: Shandre M. Thangavelu ,Email: Shandrethangavelu@gmail.com
Copyright ©2021 Journal of Economic Integration
ABSTRACT
This study examines the impact of the Association of Southeast Asian Nations (ASEAN)-Australia-New Zealand Free Trade Agreement (AANZFTA) on Australian trade with a particular focus on imports from ASEAN member countries to Australia. We examine the AANZFTA’s utilization by ten ASEAN countries at the six-digit trade classification level from 2012 to 2016 using Australian customs data. We implement Ando and Urata’s (2018) and Hayakawa et al.’s (2014) framework of free trade agreement (FTA) utilization based on preferential tariff margins. We also account for overlapping FTAs that are likely to impact the AANZFTA’s utilization. The results indicate that preferential tariff margins positively impact FTA utilization. However, the results also indicate that the AANZFTA’s utilization rate across ASEAN countries is low relative to Australia’s bilateral FTAs with Malaysia, Thailand, and Singapore. We also find evidence that co-sharing rules of origin positively impact FTA utilization.

JEL Classification
F13: Trade Policy; International Trade Organizations
F15: Economic Integration
F53: International Agreements and Observance; International Organizations
Keywords: preferential tariffs | trade liberalization | preference erosion
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