Free Trade among South, East and South-East Asian Countries

Abstract

This study investigates the potential trade flows between countries of South, East and South East Asian region as a result of tariff liberalization using the GTAP-model. The study reveals that tariff liberalization has positive effects on all country groupings of South, East and South East Asian nations, with no or nominal negative effect on rest of the world. The study finds that engagement of South Asian region is crucial for Asian regionalism if the goal is to maximize welfare of people in this region. The present study reveals that there is a huge unrealized potential in the countries of this region and free trade will be welfare enhancing, hence there is a need to explore greater cooperation in South, East and South East Asian region like the EU. JEL Classification: C68; F11; F13; F14; F17.