Prospects of an ASEAN-People's Republic of China Free Trade Area: A Qualitative and Quantitative Analysis

The Association of Southeast Asian Nations (ASEAN) and the People's Republic of China are economic partners as well as economic competitors. The ASEAN– People's Republic of China Free Trade Area (ACFTA), which is set to come into effect around 2010, is designed to boost trade between the two sides. In this paper, we use insights from customs union theory for a qualitative analysis of whether ACFTA would be beneficial for both sides. We also apply a computable general equilibrium model to perform a quantitative analysis of the same issue. Both our qualitative and quantitative analyses provide grounds for guarded optimism about ACFTA's prospects as a vehicle for strengthening economic partnership between ASEAN and the People's Republic of China.