The Impact of the ASEAN Economic Community on Agricultural Trade
This study evaluates agricultural trade effects of the ASEAN Economic Community (AEC), established in 2015. Although the ASEAN community’s GDP has increased since 2015, progress has varied across economic sectors and member countries. Since many ASEAN member states are agriculturally intensive countries and major exporters into the world market, agricultural trade effects are crucial. Using Poisson Pseudo Maximum Likelihood (PPML) gravity model, the results suggest that the AEC increased extra-ASEAN agricultural trade, though it decreased intra-regional trade. This tradeoff is due to the movement towards trade liberalization, including tariff elimination, non-tariff measures, and free movement of factors. The results of synthetic control method (SCM) substantiate the ASEAN community’s agricultural trade reduction, illustrating that the fall in intra-regional trade outweighed extra-bloc trade expansion. Moreover, the comparative study of Thailand and Vietnam’s rice exports implies a linkage between one country’s trade decline and another country’s trade growth induced from internal country factors such as government support and non-tariff measures (NTMs). This study concludes that individual member states must adjust internal strategies to cooperate with the AEC’s goals for initiating trade growth and reaching sustainable economic growth.