Clothes Without an Emperor: Analysis of the Preferential Tariffs in ASEAN

Posted: 28 Oct 2008

See all articles by Annette O. Pelkmans-Balaoing

Annette O. Pelkmans-Balaoing

Erasmus University (Rotterdam)

Miriam Manchin

University College London; Centro Studi Luca d'Agliano

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Date Written: June 26, 2008

Abstract

This paper examines the current state of intra-ASEAN trade under the preferential regime of the AFTA. It partly addresses some data problems and employs a gravity model to arrive at alternative ways of gauging the importance of preferences in the absence of data on the actual utilization of AFTA preferential tariffs. Our results show that although the range of products where AFTA might have an influence is limited, preferences seem to matter when the differential margin between the MFN and preferential tariff rates reaches a critical amount, allowing regional exporters to cover the costs of requesting preferences. However, at very high differential margins, the significance of AFTA preferences seems to wane. This indicates either the presence of non-tariff measures which prevent traders from exploiting the huge tariff discounts offered by the AFTA, and or, the propensity of ASEAN to extend high preferences on products where little or no intra-ASEAN trade takes place.

Keywords: ASEAN trade policy, Free trade areas, Empirical estimates of preference utilisation

JEL Classification: F13, F14, F15

Suggested Citation

Pelkmans-Balaoing, Annette O. and Manchin, Miriam, Clothes Without an Emperor: Analysis of the Preferential Tariffs in ASEAN (June 26, 2008). Journal of Asian Economics, Vol. 19, No. 3, 2008. Available at SSRN: https://ssrn.com/abstract=1290363

Annette O. Pelkmans-Balaoing

Erasmus University (Rotterdam) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Miriam Manchin (Contact Author)

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Centro Studi Luca d'Agliano ( email )

Via Conservatorio 7
Milan, 20122
Italy

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