Research on World Agricultural Economy

The Role of ASEAN+5 Trade Agreement in Boosting Agricultural Exports: Insights and Implications for the RCEP Agreement

Heri Akhmadi

Department of Agricultural and Resource Economics, Kangwon National University, Chuncheon 24383, Republic of Korea; Department of Agribusiness, Universitas Muhammadiyah Yogyakarta, Bantul 53183, Indonesia

Ji Yong Lee

Department of Agricultural and Resource Economics, Kangwon National University, Chuncheon 24383, Republic of Korea

DOI: https://doi.org/10.36956/rwae.v6i1.1371

Received: 6 October 2024 | Revised: 21 October 2024 | Accepted: 23 October 2024 | Published Online: 20 December 2024

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Abstract

The ASEAN Regional Comprehensive Economic Partnership (RCEP) agreement is the world’s largest free trade agreement, which aims to deepen economic integration in East Asia, with ASEAN as a hub. This study examines the impact of the ASEAN regional trade agreement with five major partner countries, which was then consolidated into a single free trade agreement, the Regional Comprehensive Economic Partnership, on Indonesian agricultural exports, including the three major commodities of palm oil, rubber, and coconut. The Poisson Pseudo-Maximum Likelihood (PPML) approach was employed to examine the impact of Indonesia’s participation in the ASEAN+5 FTAs on its exports to 35 major partner countries over the period from 2000 to 2020. The empirical findings suggest that Indonesia’s involvement in the ASEAN+5 agreement, which serves as a proxy for the Regional Comprehensive Economic Partnership (RCEP), has had a positive effect on its rubber exports, but a negative and significant impact on the exports of aggregate agriculture, palm oil, and coconuts.

Keywords: ASEAN; FTA; Trade Integration; Gravity Model; PPML

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