**<u>Table 3.2 ASEAN and Total Trade Flows</u>**

|**Trade Agreement**|<sup>k</sup><br>Coeffi|<sup>l</sup><br>cients|<sup>k</sup><br>Bias cor|<sup>l</sup><br>rected<sup>1/</sup>|
|---|---|---|---|---|
||β|β|β|β|
|ASEAN - Australia - New Zealand|0.293<br>(0.084)|0.150<br>(0.053)|0.260<br>(0.124)|0.144<br>(0.058)|
|ASEAN - China|0.630|0.130|0.572|0.127|
||(0.053)|(0.054)|(0.108)|(0.058)|
|ASEAN - India|0.370|0.149|0.320|0.143|
||(0.113)|(0.053)|(0.137)|(0.058)|
|ASEAN - Japan|0.190<br>(0.081)|0.148<br>(0.054)|0.186<br>(0.109)|0.142<br>(0.059)|
|ASEAN - Korea, Republic of|0.178<br>(0.087)|0.150<br>(0.053)|0.167<br>(0.102)|0.144<br>(0.058)|
|1/ This estimator from Correia, Guimaraes<br>biases arising from country specific time tre<br>Note: Standard errors in parenthesis.<br>ASEAN Free Trade Area (AFTA)|0.498<br>(0.095)<br>and Zylkin (201<br>nds and other|0.143<br>(0.053)<br>9) adds robustne<br>parameters in th|0.523<br>(0.155)<br>ss by correcting<br>e model.|0.136<br>(0.058)<br>the potential|

Note: Standard errors in parenthesis. In all cases, the specific trade agreement estimate ( ) is larger than the estimated average across all other trade agreements. The lower estimate for the average across other agreements suggests that some agreements are not associated with larger increases in trade, but ASEAN ββ<sup>kk</sup> agreements are not examples of small effects. On the contrary, the fact that the ASEAN estimates ( ) are larger suggests that ASEAN agreements generate larger increases in trade than other agreements. Note that all coefficients lie between 10 and 20 percent, which is consistent with the literature. Notably, the ASEAN-China trade agreement has had the ββ<sup>kk</sup> greatest effect, with an increase of around 60 percent in trade after signature (both in biased ββ<sup>ll</sup> and unbiased models). The ASEAN–Republic of Korea agreement yielded the lowest effect (although larger than the average trade agreement). This may be due to the fact that the Chinese market is larger, but since the estimation includes a China-specific time trend, the larger estimate for the Chinese agreement may be due to other factors.

Trade agreements can affect different products differently. To explore this possibility, Table 3.3 presents the gravity model results that emerge when the same equation is estimated for data restricted to just apparel trade. Apparel is an important export for some countries but not others. In addition, different agreements treat apparel differently, especially through different rules of origin that define what kind of transformation must take place within the signatory countries to qualify for agreement preferences (Abreha and Robertson, 2023). The results in the apparel sector differ from those derived from total trade only for the case of the ASEANIndia agreement. Results show that this agreement has produced a smaller increase in apparel trade than the change observed in other agreements. One likely reason for this is that the negotiated rules of origin in the India agreement are more restrictive. The rest of coefficients are positive and considerably larger than the average in both biased and unbiased models. ββ<sup>kk</sup> 17 | P a g e