Variation of Regional Trade Agreement Impact across Member Countries: The Case of Southeast Asia
Variation of Regional Trade Agreement Impact across Member Countries: The Case of Southeast Asia

Summary/Abstract: This paper investigates whether the impact of a Regional Trade Agreement (RTA) may vary across members. We use several specification of gravity model using panel- bilateral manufacturing trade data during 990- 2012, and comparing the trade creation and trade diversion effects across countries in Southeast Asia due to the implementation of an RTA. Additionally, this paper also investigates the changes of the relative effects before and since the Asian financial crisis. The estimation results suggest heterogeneity of RTA impact across members. In particular, one country has the lowest trade creation impact and significant trade diversion compare to three other members, while there are several countries did not show trade diversion. Further investigation indicates that the trade diversion arises after the Asian financial crisis. Moreover, the crisis also lowers intra- regional trade bias in some countries, but vary in magnitude and significance.

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