An Investigation on the Effectiveness and Trade Direction of ASEAN Trade Agreements

: This study aims to evaluate the effectiveness of the ASEAN regional trade agreement by comparing the growth rates of intra-ASEAN trade with those of the rest of the world as well as with major trading countries, China, the USA, the EU


INTRODUCTION
The General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) both advocate for trade liberalization, which has resulted in the emergence of Regional Trade Agreements (RTAs).These RTAs aim to lower trade barriers as well, but in a more preferential way (Jugurnath et al., 2007).The number of RTAs is growing, and their distribution is altering.Fifty trade agreements were in force in 1990.In 2017, there were over 280.RTAs have been revived following the fast growth of European and North American integration in the late 1980s (Osnago et al., 2017).Additionally, since the late 1990s financial crisis, the fast progress of market-driven regionalization in East Asia has hastened the worldwide trend toward regionalization.Furthermore, the failure of the Doha Development Agenda (DDA) round of the World Trade Organization (WTO) is likely to force nations to seek an alternative trade policy option (Park & Park, 2011).
The Association of Southeast Asian Nations (ASEAN) launched the ASEAN Free Trade Area (AFTA) in 1993, a free trade agreement (FTA) between ASEAN member countries.Through the AFTA Common Effective Preferential Tariff (CEPT) Scheme, ASEAN Member Countries have attained significant progress in decreasing intra-regional tariffs.Over 99 % of items on the ASEAN-6's CEPT Inclusion List (IL) have been lowered to 0-5% tariffs.The ASEAN-6 comprises Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, and Thailand.In comparison to the founding countries of ASEAN, the new ASEAN members (Vietnam, Myanmar, Laos, and Cambodia) have a negligible impact on trade growth.AFTA was instrumental in fostering intra-AFTA trade growth (Okabe & Urata, 2014).In contrast, Lor (2019) discovered that ASEAN had had less of an influence on intra-ASEAN trade levels than the average worldwide FTA which includes EU, NAFTA, and Mercosur.These contradicting results indicate that there exists a great demand for more study in this field.
In light of AFTA's contradictory role in trade liberalization, we attempt to analyze the impact of AFTA on trade between AFTA member nations.We are particularly interested in determining whether AFTA has facilitated trade between AFTA member countries, as anticipated before the agreement's establishment.This study is the first of its kind to examine historical intra-ASEAN trade trends and growth and compare them to inter-ASEAN trade trends and growth to determine whether AFTA has a greater impact on intra-ASEAN countries' trade growth than on inter-ASEAN countries' trade growth using updated aggregated data.Although most of the literature concentrated on intra-ASEAN trade, it did not contrast it with inter-ASEAN trade.The goal of the AFTA will not be achieved even if intra-ASEAN trade increases, as long as it does not outperform growth in inter-ASEAN trade.
The analysis adopts a descriptive approach, analysing bilateral trade data between ASEAN member countries and with inter-ASEAN countries, i.e., the European Union (EU), the United States of America (USA), China, and India from 1990 to 2019, and employs the Panel GMM method to test whether the ASEAN nations' trade openness is significant enough to affect their GDP growth or not.The data set spans two time periods: 1990-2004 and 2005-2019, to compare the trends and growth of trade between these two periods.The fact that China joined the WTO on December 11, 2001, is the main ground for adopting 2004 as the cutoff point for two observation periods.We have waited 3 years to observe China's full impact on ASEAN countries.Since we are interested in comparing patterns with China, it would make more sense to analyze trends before and after China's WTO membership.
The findings indicate that bilateral trade between some intra-ASEAN members, such as Indonesia-Malaysia, Indonesia-Thailand, and Singapore-Thailand, declined in both imports and exports from 2005 to 2019 while Malaysia-Philippines and Philippines-Thailand decreased in the import sector.Furthermore, the study reveals that intra-ASEAN import and export market shares have decreased over time, while inter-ASEAN import and export market shares have increased.This raises concerns about the effectiveness of ASEAN RTAs in competing with China and India in the ASEAN market.The descriptive analysis is supported by first-differenced GMM and system GMM results.Initially, from 1990 to 2004, trade openness and real GDP growth had a significant positive association.However, after China's WTO accession, from 2005 to 2019, this association became negative.

LITERATURE REVIEW
The systematic review is an excellent method for identifying research gaps (Hiebl, 2021).It provides a transparent and structured process for searching and evaluating papers related to a specific research problem.Through systematic analysis, researchers can uncover publication characteristics, research categories, key institutions, countries, citation patterns, and content analysis of keywords and names.This study highlights three key benefits of conducting a systematic literature review.
Firstly, it ensures that selected papers offer reliable evidence and align with the study's scope, reducing the need for extensive review (Kraus et al., 2020).Secondly, it employs a multi-stage approach to gather widely circulated publications from reputable sources relevant to the research topic.Lastly, it guarantees that all included studies have undergone prior reviewer assessment, ensuring methodological rigor, scope, and reliable findings.
The systematic literature review in this research consists of three phases.The first step involves selecting a search strategy, with a manual search of journal articles and thesis papers using keywords related to the study.Keywords such as "Intra-ASEAN vs Inter-ASEAN", "Intra-ASEAN Trade", and "Inter-ASEAN Trade" were employed.The third phase is to set the publication year range, which in this case covers papers between 2010 and 2021 due to the growing interest in the research field.A keyword search in Google Scholar yielded eleven relevant papers, with a focus on two primary keywords, "Intra-ASEAN Trade" and "Inter-ASEAN Trade" to investigate core variables and methodologies.This narrow search criteria excluded the influence of other FTAs on trade creation and diversion.

Objectives of the Review Studies
Shimizu (2021) examines ASEAN and its role in guiding East Asian economic integration.The author describes how ASEAN has been trying to establish the ASEAN Economic Community (AEC), which is the most sophisticated and established economic integration in East Asia.Ishikawa (2021) analyses the AEC and assesses ASEAN economic integration.Lor (2019) attempts to examine how much intra-ASEAN trade is in comparison with the rest of the EU, NAFTA, and Mercosur, using two approaches to assess how large ASEAN sole regional trade integrations are.
This paper seeks to examine intra-ASEAN trade, reducing tariffs to levels of between 0 and 5 % under the AFTA CEPT and developing the ASEAN Economic Community.Chaisse and Pomfret (2019) conducted an economic and legal examination of the Regional Comprehensive Economic Partnership (RCEP) in terms of foreign investment.The authors evaluate how this new treaty would affect investment flows and policy in the Asia-Pacific region.The focus of Chakraborty et al. (2019) is on India's crucial contribution to the rebalancing of the Asia Pacific region's system of international trade law and governance.
The assessment of bilateral trade flows between the European Union, ASEAN, and China is the focus of Vahalík (2014).This study intends to check whether established economies that are or intend to form a preferential area are or are not natural trade partners and which economies can establish such an agreement better.Bakar (2017) proposes the position of ASEAN's trade specialization and the quality of its institutions considering a time between 1996 and 2015.This study focuses on the position of both intra-ASEAN trade as potential solutions.Devadason (2010) reports that China's impact on ASEAN is direct in promoting more exports into its large markets and changing trade flows between the Member States.As a consequence, demand and supply are thought to have become more central to China.The study, therefore, looks at China's plausibility of influencing the intra-ASEAN bilateral trade by exporting countries' demand and partner countries' supply.Napoli (2014) assesses ASEAN by analyzing data in the eleven years following Chinese accession to the WTO as a debate as to whether the rise of China as an economic hub was complementary or threatening to ASEAN.
Napoli (2014) tries to examine whether China's growth has inhibited ASEAN growth, export, and FDI attraction.Chen et al. (2017) has two purposes for their study.To further equate the ASEAN interactions with other integration experiences around the globe, on the other hand, they include a long-term meta-analysis of available metrics and supplement (and test) the largely qualitative methods in comparative literature.
In this way, the convergences and differences between ASEAN and other integration processes can be better recognized.In comparison with benchmark events, they provided insights into the ability to further deepen the mechanism of economic integration in Southeast Asia.

Methodologies of the Review Studies
Lor (2019) compares countries using trade metrics such as trade shares, trade intensity, and the regional inflation index.This method generated contradictory results.Because the first experiment produced contradictory results, a second approach using a gravity model was used.(Vahalík, 2014) conducts research using regional trade intensity indices and trade complementarity.Regional indices of trade intensity are more intense than those of other countries if the scope of trade between countries or regions varies.In other words, the trade intensity measure shows that a country exports more to a specific destination than the rest of the world on average.Trade complementarity refers to the degree to which two regions are natural trading partners in the sense that their exports and imports are complementary.
Bakar (2017) used the gravity model to assess the trade ties between two ASEAN countries.Economic comparisons between source and host countries with substantially better economic status are quantified in aggregate.The model is examined using a fixed-effects approach to account for the study's limited sample size.Devadason (2010) conducted the study using the gravity model.This study also includes analytical estimates of bilateral ASEAN trade flows.Napoli (2014) employs a qualitative approach to determine whether China's growing dominance has harmed ASEAN's GDP growth, exports, and attractiveness as a destination for FDI.Chen et al. (2017) presents a longer-term meta-analysis of available measures to more specifically equate ASEAN integration experiences to global integration experiences and to complement most consistency approaches in comparative literacy.Additionally, they used gravity model estimates to assess the potential for increased intra-ASEAN trade development.

Findings of the Review Studies
The AEC is an "FTA-plus" economic integration, and its aim and level of market integration are comparable to that of the Economic Partnership Agreement (Ishikawa, 2021).The AEC's greatest accomplishment is the creation of a free trade zone with a high degree of trade liberalization through the use of tariff removal.The ASEAN Free Trade Area's Agreement on Common Effective Preferential Tariff (ACIA) offers a thorough framework for trade and investment liberalization in the ASEAN area.Expropriation, most-favorable-nation (MFN) treatment, fair and equitable treatment, and rules on investorstate dispute settlement are all covered under the ACIA (Chaisse, Jusoh, 2016).However, ASEAN's impact on intra-ASEAN trade was less than the global average FTA, with a large and important factor determining the outcome of the regression (Lor, 2019).ASEAN trade is less integrated than EU trade.
Moreover, China has economic dominance over the EU in Southeast Asia, while China's focus on trade is waning in ASEAN countries (Vahalík, 2014).In terms of trade complementarity, the EU is a more normal trading partner for ASEAN countries than China.However, The Chinese Trade Association increased exports to the ASEAN region (Devadason, 2010).The decision is based on the fact that, since China acceded to the WTO, both export and import flow in ASEN-China has been steadily increasing.ASEAN exports to China do not suffocate bilateral intra-ASEAN trade.
Indeed, China's trade relationship with the region boosts ASEAN exports (Devadason, 2010;Napoli, 2014).China's dominance of Western markets appears to have had no impact on ASEAN countries' shortterm growth potential in GDP, exports, or FDI inflows (Napoli, 2014).Likewise, there is no proof that ASEAN countries' imports from China reduce the country's export flows (Devadason, 2010).ASEAN's export area grows faster than the global average (Chen et al., 2017).
The ASEAN-6 nations' most recent FDI inflows, however, have been focused on industries with strong development prospects and ties to international value chains (Chaisse & Pomfret, 2019).The investment regulations of the RCEP are projected to have a favorable effect on investment flows and policies in the Asia-Pacific region.However, growing protectionism, USA-China trade tension, and the COVID-19 epidemic have all had a detrimental influence on ASEAN and East Asia.
Therefore, in the face of increased protectionism and the post-pandemic age, The AEC and the RCEP will become more significant (Shimizu, 2021).Given the emphasis on services exports and investment requirements, India concentrated on signing the RCEP, which includes measures for investment as well as trade in goods and services.
Analysis of Indo-ASEAN trade trends and patterns during the previous ten years illustrates the value of complete accords with provisions for investments, goods, and services (Chakraborty et al., 2019).Nonetheless, ASEAN countries still have space to improve their intra-regional trade role (Chen et al., 2017).By removing non-tariff and technical barriers and promoting trade, ASEAN can further improve regional competitiveness by improving regional supply chains, enabling factor mobility, and strengthening regional integration.Furthermore, ASEAN-5 members can boost bilateral trade by incorporating specialization as a new gravity model feature (Bakar, 2017).The findings indicate that trade specialization and institutional effectiveness are critical for ASEAN bilateral trade promotion.Continued promotion of both would also benefit intra-trade and, eventually, regional integration.

Data Sources
Nominal bilateral trade flows are derived from the International Monetary Fund's Direction of Trade Statistics for countries inside ASEAN, outside ASEAN, ASEAN-EU, ASEAN-USA, ASEAN-China, and ASEAN-India for the years 1990-2019 (zero trade flows are excluded).As ASEAN representatives, we include Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, while as European Union members, we include the existing EU membership of 27 countries.To produce real trade flows for the panel study, nominal bilateral trade flows are scaled by exporter GDP deflators.The ASEAN Secretariat provides data on ASEAN's sources of imports and exports of goods.

METHODOLOGY
The study employed a two-stage quantitative analysis.The first approach is the descriptive statistics method, which examines the bilateral trade data among ASEAN member nations and with inter-ASEAN countries.The descriptive statistics section analyses available data to ascertain the intra-ASEAN, inter-ASEAN, and then block-wise ASEAN trade trends.
The ASEAN-EU, ASEAN-USA, ASEAN-China, and ASEAN-India trade blocs were studied from 1990 to 2004 and 2005 to 2019.We utilise the average growth rate to compare trade growth between 1990-2004 and 2005-2019.It is appropriate to utilise the average growth calculation approach as we are comparing the change in growth across several years.The formula for calculating the average annual growth rate is as follows: where N=Number of years.
In the latter portion of the descriptive statistics section, the growth rate between the current year and the previous year using the year-over-year growth rate are also compared.
The second method is the Panel GMM method which examines the extent to which the trade openness of ASEAN countries has a significant effect on their GDP growth.GMM is recommended for panel data analysis where endogeneity problems, fixed effects, heteroskedasticity, and autocorrelation exist (Roodman, 2009).The model is estimated using a first-differenced GMM estimator.This estimate may be biased if level regression explanatory factors persist (Ulaşan, 2015).A system GMM estimator is used to solve this problem.The estimated Panel GMM model is: where TO= Trade openness; LNRGDP= Log of Real GDP; REXR= Real exchange rate; EMPPOP= Employment to population ratio as employment rate; INF= Inflation rate; FDI= Foreign direct investment.

Data Analysis. Descriptive Statistics: Intra-ASEAN VS Extra-ASEAN Trade
Intra-ASEAN Trade (Indonesia Case) Between 1990 and 2004, Indonesian imports to Malaysia increased at a rate of 8.63 on average but fell to 6.36 between 2005 and 2019 (see Figure 1).The slowing average growth rate is also evident in the export growth section, which is positive from 1990 to 2004 but has turned negative from 2005 to 2019.However, bilateral trade volume between these two countries has increased over the last decade.
The image is not the same in cases involving Indonesia and the Philippines.Between 1990 and 2004, imports increased at a rate of 1.94% and a rate of 3.62% from 2005 to 2019 on average.Additionally, the export sector has experienced growing growth over the decades, with 0.91 % from 1990 to 2004 and 3.84 % from 2005 to 2019.Indonesia-Thailand trade data is discouraging.From 1990 to 2004, average import growth was extremely rapid but slowed significantly over the decades.Despite an apparent increase in export volume, export growth also declined sharply.IMF trade data for Indonesia and Singapore is inconsistent.
Statistics show that Indonesia's trade contracted in 2014.Indonesia grew 5.02% in 2014, the slowest pace in five years.Poor exports and investment growth are driving the economic slowdown.Indonesia's private consumption − 55% of economic growth − has slowed as interest rates have risen.
President Widodo raised interest rates to 7.75% in 2014 to fund fuel subsidy reform.Formerly prointegration, Indonesia now favours protectionism with industry restrictions and mineral export bans

Intra-ASEAN Trade (Malaysia and Philippines Case)
Malaysian bilateral trade data reveal an extremely strange result.Both the Philippines and Singapore have experienced negative import growth (see Figure 2).However, it is worse for the Philippines, where growth has been declining for decades, even though export growth has been growing in value during this period.Malaysian bilateral trade with other ASEAN members is not completely recorded by the IMF and thus cannot be included here.
Even though Malaysia's imports from Singapore have increased, the rate is still negative.Malaysia no longer has a fixed exchange rate.The increased exchange rate volatility necessitates an examination of its impact on bilateral trade between Malaysia and Singapore.Despite their tight economic links and a significant amount of bilateral trade, both nations' trading is vulnerable to exchange rate risk.Eight importing industries face the exchange-rate fluctuation effect over time (Aftab, Rehman, 2017).In six situations, the volatility coefficient is positive, whereas in the other two, it is negative.Both negatively impacted industries, on the other hand, are part of Malaysia's big importing industries from Singapore (e.g., 34 natural and produced gas; 57 primary form plastics), which account for around 5 % of total trade.This means that fluctuating exchange rates deter Malaysian gas and plastic imports from Singapore.
Bilateral trade data reveals the Philippines' positive trade relations with fellow ASEAN members (see below Figure 2).Considering Malaysia's export patterns to key trade partners, Singapore, the top export destination in 1990 (see Figure 3), lost its privilege.The U.S. received 21% of exports in 1995, then declined until 2006.The EU export percentage stabilised at 12% after 2008.The biggest drop was in Singapore.Late 1990s exports to the state were 20%.The number has dropped to 14% since 2019.However, China's import of Malaysian goods increased from 3% in the late 1990s to 14.15% in recent years.Export destinations have changed due to Malaysian trade dynamics.Figure 3 demonstrates that the country has been increasing its imports from Thailand and Singapore, although import growth has slowed from 13.10 to 8.28.Notably, imports began declining after 2011.
Thailand was the world's largest rice exporter for more than three decades until 2012, while the Philippines was the world's largest rice importer from 2003 to 2011, importing more rice (14.8 million tons) than any other country.Thailand revived the paddy pledging program in 2011 (Fang, 2015), posing as a loan, which led to stockpiles of rice and a potential global crisis.India's decision to resume rice exports in 2012 eased this crisis, causing Thailand to lose its leading position in rice exports to Vietnam and India.Thailand's spending on the program, amounting to THB376 billion (USD12.5 billion) in one fiscal year (World Bank, 2012), had a significant impact on the country's economy.A substantial portion of this cost, THB134 billion (USD4.4billion), was never recovered due to selling rice at a loss (Hookway, 2013), contributing to Thailand's declining export growth since 2011.
In the case of the Philippines' trade with Vietnam, from 1990 to 2004, there was negative average import growth, largely due to a decline in imports in 2004 caused by natural disasters.However, from 2004 to 2019, there was a shift to positive growth in imports.This is the primary reason Thailand's export growth has been declining since 2011.From 1990 to 2004, the Philippines-Vietnam average import growth was negative (-3.22), but from 2004 to 2019, it shifted to positive growth (3.87).This is mostly because imports decreased in 2004.Between November 14 and December 4, 2004, four tropical depressions and typhoons battered the eastern coast of the Philippines.Heavy rains triggered massive landslides and deadly flash floods, wreaking havoc and killing over 1600 people (Gaillard et al., 2007).This could account for the decline in Vietnamese exports to the Philippines in 2004.From 2004 to 2019, the Philippines' exports to Singapore grew at a negative rate, though the graph indicates that the trend has been growing since 2012.

Intra-ASEAN Trade (Thailand and Singapore case)
Thailand-Malaysia trade has seen a slowdown in import and export growth.Import growth dropped from 7.47 to 0.74 over the analysed periods, notably declining during the 2009 financial crisis (see Figure 4) and from 2014 to 2016, possibly linked to political instability following the military junta's takeover in Thailand.
In the case of Thailand-Vietnam trade, there was an increase in import growth (from -2.0 to 5.41) but a significant decrease in export growth (from 31.68 to 9.12), with declines during the 2008 financial crisis and in 2011 due to Thailand's paddy pledge program which was detailed in the preceding section.
Singapore's trade with Thailand also witnessed fluctuations, resulting in decreased import and export growth.However, Singapore has seen growing trade with Vietnam over the years, even though the import growth rate remains negative.Though as can be seen from Figure 4 a decline in import and export growth in most cases of intra-ASEAN bilateral trade, this does not mean that trade between ASEAN countries is declining.When we look at the pattern, we can see a rise in imports and exports between the two periods.While some countries experience ups and downs, if we look at the real value of exports and imports from 1990 to 2019, we see that they have been rising over time but at a decreasing rate.

Extra-ASEAN Trade
ASEAN exports to non-ASEAN countries have risen in recent years.In 1993, ASEAN exported less than USD 200,000 million to the rest of the world (see Figure 5).ASEAN imports from non-ASEAN countries have grown over time (see Figure 6).

Source: Authors' calculation from IMF (2021) data
In 1994, year-on-year growth was 19%.The growth rate dropped 29% in 1998.Import growth peaked at 36% in 2004.Since 2010, growth has slowed in.Growth accelerated in 2016 but dropped in the last two years.There are similarities between ASEAN and extra-ASEAN export-import figures.1998, 2009, and 2015 had the lowest growth rates, while 2000, 2004, and 2010 had the highest.Between 1993 and 2004, non-ASEAN imports grew 6.27 percent, while between 2005 and 2019, they grew 6.32 percent.

ASEAN-EU
Between 1993-2004 and 2005-2019, the growth of ASEAN countries' exports to the EU slowed (see Figure 7).Between 1993 and 2004, the average growth rate was 7.66 but fell to 4.39 between 2005 and 2019.Before 2009, the export and import trends were almost identical.In 2009, ASEAN exports to the EU fell 20 % year on year, the lowest annual growth rate on record.Since 2010, the pattern has shifted and has not risen to the extent that it did before 2009.The year-over-year growth rate peaked in 2004 at 27 % above the previous year.
The rate of ASEAN import growth has increased over time.From 1993 to 2004, the average growth rate was 4.74, and from 2005 to 2019, it was 5.18 (see Figure 8).Although average growth has increased over time, the import trend has recently decreased from 2014 to 2017.Similar to the export case, the ASEAN-EU saw the highest 34 % import year-over-year growth rate in 2004.

ASEAN -USA
Thailand exhibits a stable pattern with the USA in both exports and imports, while Indonesia exhibits negative export growth and a roughly stable pattern in imports over the periods examined (see Figure 9).However, growth has accelerated between 2004 and 2019, relative to the 1990-2004 period.The Philippines, Singapore, and Vietnam all experienced increased export growth during these two years, but Indonesia and Singapore experienced increased import growth.Malaysia's performance in both sectors is deteriorating, and Thailand's performance is much more stable in both sectors.

ASEAN -China
Indonesia grows at a faster pace than other ASEAN nations in China's import and export markets (see Figure 10), while Malaysia, the Philippines, and Thailand grow at a slower rate in the import sector (between 1990-2004 and 2005-2019).

Figure 10. ASEAN -China Trade
Source: IMF (2021) Although Singapore's imports from China are declining, its exports are rising, whereas Malaysia's imports and exports are both falling.In comparison to other nations, both the Philippines and Thailand experienced a downward trend in both industries.According to the Figure 10, Indonesia, Thailand, and the Philippines are the top three countries in terms of export and import volume.

ASEAN -India
Similarly, extra-ASEAN trade between Indonesia and India has been declining since 2011 in both the import and export sectors (see Figure 11).As shown in Figure 11, Singapore is the only country on the list with a growing growth rate in both sectors.Indonesia, Malaysia, and Vietnam have experienced a fall in growth in both sectors in this group.While the Philippines and Thailand saw a decline in export growth, they saw an increase in import growth.

Granger Causality Test
Table 1 shows the pairwise Granger causality test result.The result shows that real GDP growth Granger causes trade openness in a unidirectional way rather than the other way around.To determine the causal path of real GDP growth Granger and Trade openness for ASEAN countries, a pairwise Granger Causality test was conducted.

Period 1990-2019
The real GDP growth coefficient, based on the first-differenced GMM result, is -0.051 with a p-value of 0.124 (see equation 2).This implies that real GDP growth has a negative impact on trade openness, but the effect is not statistically significant from 1990 to 2019.However, the system GMM showed that real GDP growth significantly reduces trade openness (with a coefficient of -0.0595622 and a p-value of 0.014 in equation 3).

First-differenced GMM result*:
= 2.13 +. 84 −1 − .05 + .00001 − .01 + .002 + .006 (3) The coefficients for REXP, EMPPOP, INF, and FDI were all found to have p-values greater than 0.05 in the first-differenced GMM, showing that they are not statistically significant predictors of Trade Openness.However, system GMM results show that EMPPOP has a large negative impact on Trade Openness, whereas FDI has a significant positive impact.
Therefore, greater trade openness in the present is associated with lower employment rates and higher FDI.However, neither the real exchange rate nor inflation appear to be important determinants of Trade Openness.

Period 1990-2004
The first-difference GMM discovered a statistically significant positive association between real GDP growth and Trade Openness.However, the system GMM discovered a negative (-0.02) but not statistically significant (p-value of 0.743) relationship (see equation 4), implying that the relationship between these two variables may be weak.
However, system GMM results indicate that EMPPOP, INF, and FDI are strong determinants of Trade Openness (see equation 5).Lower employment, higher inflation, and more FDI are all connected with greater trade openness.
However, the real exchange rate has no discernible effect on Trade Openness.

Period 2005-2019
Both first-differenced GMM and system GMM results for this period demonstrate that the coefficient for LNRGDP is negative and not statistically significant (see equation 6 and 7).
First-differenced GMM result*: The REXP, EMPPOP, INF, and FDI coefficients were small and not statistically significant, according to the first-differenced GMM.However, the system GMM results indicate that inflation has a large negative impact on Trade Openness.Other variables, such as REXR, EMPPOP, and FDI, have no statistically significant impact on Trade Openness.
The descriptive analysis, along with first-differenced GMM and system GMM results, reveals that trade openness and real GDP growth had a significant positive relationship from 1990 to 2004.However, after China's WTO accession, from 2005 to 2019, this association became negative but insignificant.
Overall, from 1990 to 2019, the relationship between trade openness and real GDP growth remained negative and insignificant.

ASEAN's Export and Import -Shifting Trend (Products and Services)
Intra-ASEAN and Inter-ASEAN trade trends ASEAN's trade landscape has evolved in recent times.Table 2 represents the ASEAN export market share over the period of 1996 to 2019.In 1996, the member countries exported 26% of ASEAN goods, with the US and EU getting 18% and 15%, respectively.In 2019, China absorbed 14.2% of ASEAN's exports, up from 2%.The intra-ASEAN export market is declining.It made up 25.8% of exports in 2012 but has fallen.
Even though China and India imported more ASEAN goods in 2019, it was 2.5% lower than in 2012 and 2.7% smaller than in 1996.Since 1996, the EU and US have lowered their ASEAN imports by 4.2% and 5.1%, respectively, but their market share has grown gradually after 2012.The share of intra-ASEAN imports rose from 18% in 1996 to 23.9% in 2008 (see Table 3).Since then, intra-ASEAN imports have fallen to 21.6% in 2019.In comparison, ASEAN's trade with China rose from 3% to 21.9% between 1996 and 2019, making China the top import supplier for ASEAN.China and India increased their import market share in ASEAN, with India's share rising from 1% in 1996 to 2.1% in 2019.The EU and USA lost import market share in ASEAN, reflecting their export market decline.
The EU lost 6.9% of its ASEAN import market share since 1996, while the USA lost 7.0%.These changes reflect ASEAN and its trading partners' shifting trade dynamics.Intra-ASEAN had a declining export and import market share.The intra-ASEAN market share is dropping while China and India are strengthening their export and import markets, which is concerning.This is because the intra-ASEAN trade variety is lower than that of ASEAN's neighbours.
Thus, intra-ASEAN trade may have a higher opportunity cost than inter-ASEAN trade.Customer preferences have also contributed to intra-ASEAN trade market share decline.In 1996 and 2019, ASEAN's main exports and imports were electrical machinery, sound recorders, nuclear reactors, boilers, and parts (ASEAN Secretariate, 2001; ASEAN Secretariate, 2020).
Therefore, ASEAN countries consistently trade the same goods.Export-import items lack variety.Diversification and specialization are essential for boosting intra-ASEAN trade as customer tastes change.

Country-wise ASEAN's Export and Import
In this section, the analysis to trends in country-wise exports and import destinations.This will give us further insights into how member countries are finding some destinations better than others for their exports and imports.
Table 4 shows the ASEAN-6 trade bloc export shares.The export share indicates the partner country's percentage of total exports.Indonesia's exports to intra-ASEAN, China, and India have grown, while its EU share has fallen.Malaysia's intra-ASEAN exports declined at first but gradually increased.
The Philippines' intra-ASEAN share fluctuated between 1996 and 2019, while export share dropped with the EU and USA.Despite a slight decline since 2013, Singapore led intra-ASEAN exports.Thailand maintained its intra-ASEAN trade share, with China and India rising and the EU and USA falling.Vietnam's intra-ASEAN share has fallen since 2005.China perceived mixed results, with India and the USA increasing their market shares and the EU losing market share after 2000.As shown in Table 5, Intra-ASEAN imports rose from 1996 to 2008, then fell, with China becoming Indonesia's top importer in 2019.Malaysian intra-ASEAN imports rose until 2012, then fell, while Chinese and Indian imports rose.The Philippines' intra-ASEAN import share rose until 2010, then fell until 2014, and then rose again.The import share with China increased significantly, but with India, it grew after 2012.Singapore's intra-ASEAN imports have fallen since 2004 despite rising Chinese imports.Thailand has a more consistent intra-ASEAN export share than other countries, though China has recently held the largest import share.Vietnam's intra-ASEAN imports fell again, with China accounting for more than a quarter of Vietnam's imports.India's import share rose until 2008, then fell.The EU decreased its imports from Vietnam, while China and the US increased them.
Examining tariff rates is necessary for understanding the declining trade shares of individual ASEAN nations relative to other trade blocs (Table 6).Table 6 shows the ASEAN member countries' tariff schedule under the ASEAN Trade in Goods Agreement (ATIGA).In contrast to the EU, AFTA has no common external tariff.Instead, ASEAN countries impose tariffs on non-ASEAN imports individually, while ASEAN-originating goods incur tariffs from 0% to 5%, except for the Cambodia, Lao PDR, Myanmar, and Vietnam (CMLV) states (see Table 6).In 2010, Malaysia and five other ASEAN nations created a free trade zone, eliminating import tariffs on 99.9% of Inclusion List commodities and leaving only 0.35% of tariff lines.The 2016 ATIGA Tariff Schedule shows 96.01% of tariff lines in ASEAN countries have 0% import duty.
Singapore imposes no tariffs on all ASEAN-traded products.Thailand moves up to second place, behind only Singapore, by placing no tariffs on 99.85 % of the ASEAN region's traded products.This could be the reason for Table 3's and Table 4's findings that Thailand is the most consistent country in terms of increasing the percentage share of intra-ASEAN imports and exports, while Singapore has the largest share of intra-ASEAN exports among ASEAN member countries.Table 5 also explains why Vietnam does not have strong experience in both export and import shares of intra-ASEAN trade.Vietnam imposes no tariffs on 72.24 % of ASEAN traded goods, ranking second-last among ASEAN-10 countries.However, we cannot explain why the Philippines has a lower intra-ASEAN export share based on intra-ASEAN tariff rates.Since the tariff rates in the Philippines are as much as those in Indonesia and Malaysia, the cost factor is much more significant than the tariff rate.
Table 7 shows the average tariff rate of the sample countries for countries outside of ASEAN.For almost all of the sample ASEAN countries, the EU and the USA have had a declining share of trade over the periods.Except for the United States in 2019, both the EU and the USA have a nominal tariff rate that is decreasing over time.So, it is impossible to conclude that tariff rates are the cause of the EU and the USA losing trade shares to ASEAN.However, China has far higher tariff rates than the EU and the USA.As a fact, in the case of the EU and the USA, the cost factor could be much more significant than the tariff rate.India has the highest tariff rate among these nations, even though most of the country has seen an increase in trade share.If the tariff rate falls to a low level, the percentage share will rise by an estimated amount, which was not seen in some countries.Essentially, China is crowding out ASEAN's Western markets and seizing its spot.China's magical innovation, low production costs, and technical advancement assist them in maintaining this role.

Limitation and Further Research
The main limitation of this study is the unavailability of data.Intra-ASEAN data for Indonesia-Singapore, Indonesia-Malaysia, Malaysia-Thailand, and Thailand-Singapore are not accessible, and bilateral trade data for Vietnam is mostly lacking in the IMF.With the implementation of the RCEP agreement on January 1, 2022, the trading environment between the ASEAN countries and their partner FTA countries, as well as intra-ASEAN and inter-ASEAN countries, would undoubtedly be impacted.The forthcoming period will reveal how the trade trajectory will evolve.Further research can be conducted by incorporating the data from these nations, if accessible, and considering the efficacy of the RCEP.

CONCLUSIONS
RTAs among Southeast Asian countries have fostered the development of new trade opportunities.In the case of ASEAN, the implementation of AFTA has led to a reduction of intra-ASEAN tariffs, but trade growth has not been as significant as anticipated.This study aims to determine the effectiveness of the ASEAN countries' regional trade agreement and to determine whether intra-ASEAN or inter-ASEAN trade is more successful.Intra-ASEAN, inter-ASEAN, ASEAN-EU, ASEAN-US, ASEAN-China, and ASEAN-India export-import patterns were analyzed from 1990 to 2004 and 2005 to 2019.While trade between ASEAN nations is increasing in real terms, the bulk of bilateral ASEAN trade situations is experiencing a decline in import and export growth.
The AFTA has had a mixed impact on trade between member countries.While AFTA has achieved significant progress in decreasing intra-regional tariffs, the recent decline in both bilateral export and import between intra-ASEAN members Indonesia-Malaysia, Malaysia-Philippines, and Philippines-Singapore is a cause for concern.Moreover, Thailand's trade has experienced a decline with all ASEAN-6 countries except Vietnam.This decline can be attributed to government policies, which have not been conducive to trade growth.It is also interesting to note the different patterns among ASEAN countries in their trade relationships with the USA, China, and India.As a result of sector specialization, certain directions of inter-ASEAN trade have altered, as demonstrated by Singapore's rise in exports to China throughout these years, despite slowing import growth.The reverse has happened in bilateral trade between the Philippines and India, Thailand, and India.The slowing growth of ASEAN's exports to the EU and the increased growth rate of imports may indicate a shift in the trade balance between the two regions.The descriptive analysis is supported by the results of first-differenced GMM and system GMM.Initially, trade openness and real GDP growth exhibited a significant positive association from 1990 to 2004.However, following China's accession to the WTO, trade openness and real GDP growth showed a negative but insignificant association from 2005 to 2019.From 1990 to 2019, trade openness and real GDP growth had a negative and insignificant association.
The ASEAN region's main export and import markets have shifted over time.In 1996, the majority of ASEAN's exports were sent to other member countries, while the USA and the EU were also significant export destinations.However, in 2019, China became the second largest export destination after ASEAN for ASEAN countries, with the intra-ASEAN export market shrinking over time.In 2019, China was the primary source of goods imports for ASEAN countries.India's share of ASEAN's import market has also increased since 2004.Just Indonesia's and Thailand's export share to intra-ASEAN has increased, while the rest of the countries face a declining trend in intra-ASEAN export.In the import case, Singapore and Vietnam experienced a fall in import share.But in both cases, China's and India's market share has increased continuously except for the Philippines' import case against India.The EU and the US have lost market share in both the ASEAN export and import markets since 1996.
Overall, the intra-ASEAN import and export market share of ASEAN trade has decreased over time, while the inter-ASEAN import and export market share of ASEAN trade, especially China and India, has increased, indicating that ASEAN RTAs may not be effective enough to compete with the likes of China and India in the ASEAN market.The decline in intra-ASEAN market share is mainly attributed to the lack of trade diversity in the region, and the absence of product specialization, which makes intra-ASEAN trade less competitive than inter-ASEAN trade.The primary export and import commodities in ASEAN are electrical machinery and equipment, sound recorders and reproducers, and television image and sound recorders and reproducers, which leads to a lack of product diversity.
This study brings novelty by studying the historical patterns and growth of intra-ASEAN trade over three decades of updated aggregate data and comparing it to the trends and growth of inter-ASEAN trade to figure out if AFTA helps to enhance trade growth in intra-ASEAN nations more than in inter-ASEAN countries.Many of the previous studies concentrated on intra-ASEAN trade without contrasting it with inter-ASEAN trade.The goal of the AFTA will not be achieved even if intra-ASEAN trade increases, as long as it does not outpace growth in inter-ASEAN trade.
The findings indicate that the intra-ASEAN trade is not growing as quickly as expected.Though the value of trade is growing, bilateral export and import growth between intra-ASEAN members Indonesia-Malaysia, Malaysia-Philippines, and Philippines-Singapore is declining.Additionally, all of the ASEAN-6 nations except Vietnam have seen a fall in Thailand's trade.There are numerous opportunities to increase intra-ASEAN trade.The result contrasts with the findings of (Okabe, Urata, 2014), and (Chen et al., 2017).Furthermore, the findings suggest the need for policy reforms to address these issues and further promote trade liberalization among ASEAN member countries.The ASEAN regional trade agreement will not be successful until the ASEAN regions resolve the issue of trade diversity and complete the establishment of FTAs in accordance with WTO laws.

Figure 1 .
Figure 1.Intra-ASEAN Trade (Indonesia case) . The 2008 global financial crisis and a 2012 Cabinet reshuffle accelerated this trend under President Yudhoyono.Ministers have imposed new product licencing and import controls and halted bilateral free trade negotiations.2013 saw Indonesia ban raw mineral exports to boost domestic demand.Rahardja (2012) analysed Indonesia's trade security by comparing nominal and 11 effective rates of protection.In food crops, NRP and ERP increased from 11-17% to 16-24% between 1995 and 2008.Since tariffs fell, non-tariff policies rose.Indonesia has introduced 25 non-tariff initiatives since 2009, surpassing India and Thailand and restricting exports more than China, Malaysia, India, and Thailand, according to Global Trade Alert.Rising currency rates made exports more expensive, prompting government intervention and protectionism's revival.
Figure 2 shows a significant 2010 export drop.For years, Malaysia has had negative net financial flows.Since mid-2004, current account surpluses have caused negative net financial flows (Cömert, McKenzie, 2016).From 2008 to 2009, financial outflows exceeded Malaysia's foreign reserves.So, while financial flows strained the economy, trade decline was the main shock.Manufacturing, particularly electronics and electrical subsectors, suffered the most during the 2008 financial crisis.The 2010 drop in Malaysia-Singapore exports was due to this sector's vulnerability since Malaysia exports these products mostly to Singapore.Malaysian exports were vulnerable as Malaysia-Singapore exports fell in 2013, 2014, 2017, and 2019.

Figure 3 .
Figure 3. Malaysia's Major Export Partner Share (% of Total Export) Source: World Integrated Trade Solution Database, 2020.

Figure 5 .
Figure 5. ASEAN Export to Extra-ASEAN Source: Authors' calculation from IMF (2021) dataASEAN exports to non-ASEAN countries grew at a 29 % year-over-year pace in 2010.Except for the intra-ASEAN region, ASEAN exports to the rest of the world have been steadily growing in recent years.Exports of ASEAN to the rest of the world have increased steadily over time.Between 1993 and 2004, the average growth rate over time was 8.38, and between 2005 and 2019, it was 5.57.Despite a fall in growth of approximately 3 % over the years, year-over-year growth was positive in the preceding decades, except for 2009 and 2015.ASEAN imports from non-ASEAN countries have grown over time (see Figure6).

Table 6 . Number of Tariff Lines at 0% in the ATIGA Tariff Schedule of 2013
Source: ASEANSecretariate (2021)

Table 7 . Average Tariff Rate for Countries
Source: World Development Indicator(2021)