ASEAN-China free trade area: An assessment of tariff elimination effect on welfare

Abstract

The establishment of the ACFTA marks the enactment of a liberalization era between ASEAN and China. Implementation of tariff elimination cooperation agreement starts from the readiest product (EHP), Normal Track (NT), up to the most Sensitive product (HSL). This trade barrier removal agreement is expected to encourage economic growth in each country. This study aims to assess the economic impact of the policy. The simulation results show the elimination of tariff and non-tariff barriers to product groups. Falling within the NT and HSL categories can have a positive impact on trade volume, economic growth and welfare. The simulation results of the elimination of tariff and non-tariff barriers on products included in the EHP, NT and HSL categories show an increase in trade volumes in almost all countries. Thus, the simulation indicates in general, Singapore and China have increased the highest welfare relative to other ASEAN member countries.