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ASEAN and the EU: an assessment of interregional trade potentials

Author

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  • Evelyn S. Devadason

    (University of Malaya)

  • Shujaat Mubarik

    (Mohammad Ali Jinnah University)

Abstract

Though negotiations on an Association of Southeast Asian Nations – European Union (ASEAN-EU) trade agreement began in 2007, the region-wide agreement stalled, and the EU has since pursued bilateral agreements with individual ASEAN member states (AMS). Nevertheless, the goal to form an interregional agreement remains as the European Commission and the AMS are currently undertaking a stocktaking exercise to explore the prospects towards the resumption of region-to-region negotiations. In this paper, a stochastic frontier specification of the gravity model is employed to identify and compare the performance (efficiency) of exports relative to the maximum export levels for the ASEAN-EU partnership. The findings, based on a panel dataset of two-way bilateral exports between the ASEAN-10 and the EU-28 over the 2000–2016 period, indicate a low-level of export efficiency. The low efficiency scores of below 0.2 suggest a high degree of trade resistances in the ASEAN-EU partnership. The low interregional trade potentials relate to market access issues, which in turn depend on the trade policy of both regions.

Suggested Citation

  • Evelyn S. Devadason & Shujaat Mubarik, 2020. "ASEAN and the EU: an assessment of interregional trade potentials," International Economics and Economic Policy, Springer, vol. 17(3), pages 705-726, July.
    • Handle: RePEc:kap:iecepo:v:17:y:2020:i:3:d:10.1007_s10368-020-00471-5
    DOI: 10.1007/s10368-020-00471-5
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    More about this item

    Keywords

    Augmented gravity model; Stochastic frontier analysis; Interregional exports; Association of Southeast Asian Nations; European Union;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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