Has the euro been fattening the European pig meat trade?

The introduction of the euro is one of the great achievements of the European integration process. We ask whether the creation of the euro led to a significant increase in pig meat trade in the eurozone. The pig meat industry is the most important in the European meat sector, and the EU is the world's second-biggest producer of pork and the leading supplier of pig meat to the global market. No study has yet been conducted in this respect for this sector. Our results suggest that pig meat trade was encouraged between countries sharing the euro, although the impact of EU single market was still greater. Trade creation was also observed, increasing pig meat exports from eurozone to non-eurozone countries. Also, non-eurozone EU exporters suffer from a diversion effect that benefits eurozone exporters.

India–European Union Trade Integration: An Analysis of Current and Future Trajectories

In a dynamic global environment of increased economic interdependence, nations are more than ever seeking to remove barriers to trade, despite growing trends of protectionism. In this context, India and the EU-27 have initiated talks for the establishment of a Bilateral Trade and Investment Agreement (BTIA) in an attempt to bring their economies together. However, after 16 rounds of negotiations, the failure to conclude this agreement has raised questions regarding the benefits of the agreement to India. This study attempts to examine the current trade scenario and the effects of the proposed regional trade agreement by estimating a structural gravity model. This study employs the Poisson Pseudo Maximum Likelihood (PPML) estimator for analysing the trade-creation and trade-diversion effects of the BTIA to overcome the shortcomings of ordinary least square (OLS) estimators. For the empirical analysis, the merchandise export data from the Gravity database has been taken for a period of 19 years from 2001 to 2019. The results indicate that the BTIA could lead to trade creation and trade diversion, highlighting the need for a re-evaluation of India’s trade policy. JEL Classification: F10, F13, F14, F15, O24

Was India Right in Not Joining RCEP? A Cost–Benefit Analysis

India dropped out of the Regional Comprehensive Economic Partnership (RCEP), which included the Association of Southeast Asian Nations (ASEAN) countries, China, South Korea, New Zealand, Japan and Australia, after negotiating for almost seven years in November 2018 on the grounds of national interest and also that free trade agreements (FTAs) did not amount to free trade and led to more trade diversion than trade creation. The cost and benefit of a regional agreement depend on the amount of trade creation with respect to trade diversion (Panagriya, 2000). This study tries to examine India’s concerns and at the same time, highlights the cost of not joining RCEP. India’s trade deficit with 11 out of the 15 RCEP nations has been a major cause of concern. Unfavourable trade balance, concerns about the impact on dairy sector, economic slowdown, past experience with FTA’s, China factor, data localisation, rules of origin, the experience of ASEAN countries with Sino-FTA have been some of the reasons behind India’s decision to opt-out of this mega multilateral agreement. Also, bilateral trade agreements with some RCEP countries such as Japan, Malaysia, Singapore, Thailand and South Korea were operational. A multilateral trade agreement with ASEAN countries was very much in place. So, trade between India and 12 of the RCEP member countries would not have changed much after India’s inclusion in RCEP. The impact of lower tariffs would have been evident for the remaining three countries: China, Australia and New Zealand. Furthermore, there was fear of a massive surge in imports of manufactures from China, dairy imports from Australia and New Zealand. This study also examines the long term impact of this decision and if India has missed out on becoming a part of the global value chain and gaining greater market access in the Asia Pacific region. India’s policy of import substitution and protectionism did not capitulate desired results in the past. Hence, a critical evaluation of India’s decision and some validation on her concerns and fears have been done.

An ex-post analysis of trade effects of the ASEAN–Korea Free Trade Area (AKFTA) from Korea’s Perspective

This paper empirically analyzes the effectiveness of the ASEAN–Korea Free Trade Area (AKFTA) focusing on the ex-post trade creation and diversion effects with controlling related intra-bloc and extra-bloc regional trade agreements (RTAs) and economic characteristics of interconnected economies. The quantitative analysis applies a gravity model regression analysis by specifying standard pooled ordinary least squares and fixed effects regression models. We observe that the AKFTA turned out to be more favorable for Korea in terms of trade balance with ASEAN. We find that the AKFTA is a desirable trade creating RTA strongly driven by intra-bloc export activities between members and does not divert but generates more export to and import from non-members. Thus, we strongly support that the AKFTA facilitates trade between intra-bloc members and their trade with extra-bloc non-members as well. Besides which, we find that the trade creation effects of the AKFTA are industry-specific and sector-specific. For the manufacturing industry, the trade creation effects of the AKFTA are generated by both intra-bloc and extra-bloc import activity but not from extra-bloc export activity. However, for the services industry, all the intra-bloc and extra-bloc export and import activities contribute to the trade creation effects. Interestingly, we find that the trade creation effects of the manufacturing industry are smaller than those of the services industry. Considering restrictive service schedules of specific commitments in the AKFTA agreement on trade-in services compared to trade-in goods provisions, rearranging the trade-in services provisions is necessary to generate more trade gains in the future.

TRADE CREATION DAN TRADE DIVERSION ATAS PEMBERLAKUAN ACFTA TERHADAP PERDAGANGAN HORTIKULTURA INDONESIA

Abstrak Dampak positif seharusnya diperoleh subsektor hortikultura Indonesia atas implementasi ASEAN-China Free Trade Agreement (ACFTA). Namun demikian, subsektor hortikultura Indonesia belum memberikan kinerja yang berarti ketika impor produk hortikultura meningkat melalui tahapan penurunan tarif ACFTA dalam program The Early Harvest Program (EHP). Studi ini meneliti keragaan impor hortikultura Indonesia dengan menggunakan deskriptif analisis. Studi ini juga menganalisis daya saing produk hortikultura negara ASEAN-5 dengan China serta dampak kreasi perdagangan dan diversi perdagangan atas pemberlakuan ACFTA terhadap impor produk hortikultura Indonesia. Penelitian ini menggunakan metode RSCA (Revealed Symetric Comparative Advantage) dan metode ekonometrik melalui pendekatan model gravitasi dengan data panel dari tahun 2001-2018. Hasil studi menunjukkan bahwa berdasarkan nilai RSCA, Indonesia tidak berdaya saing pada kedua jenis produk hortikultura tersebut. Model gravitasi juga menunjukkan bahwa negara anggota ACFTA mampu memanfaatkan perjanjian regional ini dengan ditandai tingginya nilai impor hortikultura Indonesia terutama dari China. Ini menandakan bahwa pelaksanaan ACFTA telah menciptakan efek penciptaan perdagangan dengan meningkatkan perdagangan intra-regional antara negara anggota ACFTA, namun tidak menyebabkan pengalihan perdagangan dengan negara non-anggota (perdagangan dengan negara non anggota tidak mengalami penurunan). Oleh karena itu, diperlukan langkah kebijakan peningkatan daya saing melalui perbaikan komponen manajerial dan teknologi seiring terbukanya pasar di kawasan ini bagi UMKM Indonesia. Kata Kunci: Data Panel, Daya Saing, Integrasi Ekonomi, Model Gravitasi, RSCA Abstract The positive impact of the implementation of the ASEAN-China Free Trade Agreement (ACFTA) on the indonesia’s horticulture sub-sector should be obtained. However, the Indonesian horticulture sub-sector has not shown significant performance when import of horticultural products has increased through the ACFTA tariff reduction stages in The Early Harvest Programm (EHP). This study examines the performance of Indonesian horticultural imports using descriptive analysis. It also analyzes the competitiveness of horticultural products of ASEAN-5 countries with China as well as the impact of trade creation and trade diversion of the implementation of ACFTA on imports of Indonesian horticultural products. It uses the RSCA (Revealed Symmetric Comparative Advantage) index and the gravity model using panel data from 2001-2018. It shows that Indonesia is not competitive in both types of horticultural products (RSCA <0). The gravity model also indicates that ACFTA member countries have taken advantage of this regional agreement, marked by the high value of Indonesian horticultural imports, especially from China. This shows that the implementation of the ACFTA has created a trade creation effect by increasing intra-regional trade between ACFTA member countries, but has not led to a diversion of trade with non-member countries (trade with non-member countries has not decreased). Therefore, it is necessary to make policy strategies to increase competitiveness through improvements in managerial and technological components in line with the opening of the market in this region to Indonesian MSMEs. Keywords: Competitiveness, Economic Integration, Gravity Model, Panel Data, RSCA JEL Classification: F15, F17, Q17

Impact of India-ASEAN Free Trade Agreement: An Assessment from the Trade Creation and Trade Diversion Effects

This article investigates the impacts on the India–Association of Southeast Asian Nations (ASEAN) Free Trade Agreement (IAFTA) on trade creation and trade diversion. The gravity model is employed, where multilateral resistance terms are included. A panel data set of 45 countries that included India, ASEAN-10 nations and India’s top 34 trading partners in 2018 were used for the period from 1996 to 2018. The article explored that IAFTA leads to a trade creation in total bilateral trade in terms of exports and imports. The analysis further explored that the import creation effect was higher than that of the export creation effect.