Impact of ACFTA on Trade Creation and Trade Diversion of Fruit Industry

DOI

10.2991/aebmr.k.211119.046How to use a DOI?

Keywords

trade creation; trade diversion; ASEAN-China free trade agreement; agricultural trade; gravity mode

Abstract

This article examines the trade creation and diversion effects of ASEAN-China free trade agreements (ACFTA) for fruit industry by estimating the gravity trade model for the period between 2002 and 2016. The paper uses the panel-data with Generalized Least Square (GLS) estimate. The estimated results show that the trade creation has an effect on fruit item. The trade creation effect in ACFTA might come from the wider gap between the general tariff rate and the preferential tariff rate for ASEAN and China fruits, the close distance between commercial partners and the conversion of certificate of origin (C/O) of goods to export.

Research purpose:

Evaluating the impact of the ACFTA on the export of fruit to ACFTA member countries. Contributing to the literature on the impact of the FTA on the trade flows of member countries, in particular the export and import of Vietnamese fruit with China following the accession of the ACFTA trade liberalization agreement.

Research motivation:

In recent years, import – export balance, which affects national economy, is always considered as one of the most important item by the government. Moreover, facing with Covid-19 Pandemic during these 2 –recent years, the threat of a frozen, import- export industry is getting more attentions. Despite of the serious epidemic, Vietnam’s import- export balance has been rising steadily, which in turn encourages us to pay more attention to industry development.

Free trade agreements are rapidly increasing in recent years, represented by more and more bilateral and multilateral trade agreements being established. By participating in international and regional trade organizations, Vietnam is also gradually integrating into this trend. It not only opens a new opportunity for the country’s economic development and expanding export markets but also helps Vietnam become more involved in the value chain, creating a global production network, transforming the economic structure in a positive way and improving the business environment. New generation FTAs are putting Vietnam ahead of a new trade platform through making strategic changes to enhance economic cooperation and removing previous tariff barriers that hamper the nation-to-nation trade process. FTAs help Vietnam enjoy less-tariff and non-tariff preferential treatment, and also have conditions for more balanced restructuring of import and export markets, avoiding excessive dependence on certain markets.

China is Vietnam’s large and potential trading partner. Vietnamese companies want to improve their ability to access the Chinese market gradually. In order to take advantages of Free Trade Agreements (FTAs) with China, Vietnam needs to understand the opportunities and benefits as well as the challenges of these FTAs. Therefore, ASEAN-China Free Trade Agreements should be of interest.

Research design, approach and method:

This article is organized in the following way. Section 1 is an introduction about this research. Section 2 reviews some previous studies. Section 3 describes data and methodologies. Section 4 shows the empirical results. Final section includes summary and conclusions.

The paper applies the panel-data with Generalized Least Square (GLS) estimate.

Main findings:

The trade creation effect in ACFTA might come from the wider gap between the general tariff rate and the preferential tariff rate for ASEAN and China fruits

Copyright

© 2021 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Linh T.D. HUYNH
AU  - Oanh T.K. HOANG
PY  - 2021
DA  - 2021/12/07
TI  - Impact of ACFTA on Trade Creation and Trade Diversion of Fruit Industry
BT  - Proceedings of the International Conference on Emerging Challenges: Business Transformation and Circular Economy (ICECH 2021)
PB  - Atlantis Press
SP  - 495
EP  - 502
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.211119.046
DO  - 10.2991/aebmr.k.211119.046
ID  - HUYNH2021
ER  -