Widening and Deepening Economic Integration Impact on Bilateral Trade in the Eurozone and ASEAN

The main aim of this study is to comparatively investigate the impact of different level of economic integration on bilateral trade between the Eurozone and ASEAN. Applying augmented gravity equation, the results showed that deepening impact on bilateral trade was positive in all Eurozone members but insignificant for original member. In ASEAN, deepening impact which is creating AFTA generates positive result only between ASEAN-6, but not when CLMV joined the membership. The policy related with Maastricht criteria variables has small influence on reciprocal trade in both the Eurozone and ASEAN. Horizontal integration was improving in both the Eurozone and ASEAN for positive result of size and similarity coefficient. Intra-trade industry was a phenomenon in all Eurozone, but it was insignificant if only between original members in both the Eurozone and ASEAN due to relatively similar level of development in original members. For ASEAN, different factor endowment was determinant for higher bilateral trade when CLMV countries were included in 1990-2009.