ISSN 2039-2117 (online) ISSN 2039-9340 (print) Mediterranean Journal of Social Sciences MCSER Publishing, Rome-Italy Vol 6 No 6 November 2015 394 Assessing the Impact of ASEAN+3 Free Trade Agreements on ASEAN’s Trade Flows: A Gravity Model Approach 1 Nguyen Anh Thu Vu Van Trung Le Thi Thanh Xuan University of Economics and Business, Vietnam National University Hanoi, Vietnam Email: thuna@vnu.edu.vn Doi:10.5901/mjss.2015.v6n6p394 Abstract This paper employs the gravity model with panel data to examine the impact of ASEAN+3 free trade agreements on ASEAN’s trade flows in the period 2000 – 2013. Estimated results indicate that GDP, GDP per capita, incomegap and distance play a crucial role in bilateral trade among ASEAN members and ASEAN trade volumes with the rest of the world. Additionally, the results reveal that AFTA creates positive and significant trade-creation effects due to tariff eliminations. AFTA has been successful in promoting the bilateral trade not only among ASEAN countries but also between intra-bloc and extra-bloc countries. Conversely, ACFTA, AJCEP negatively affects intra-ASEAN trade and ASEAN’s exports to the rest of the world. Meanwhile, ASEAN’s imports from the rest of the world are negatively affected by ACFTA and AJCEP. Finally, AKFTA causes trade-diversion effect in terms of exports from member countries to non-member countries of AKFTA. AKFTA can be a positive factor in promoting exports among its members. Keywords: ASEAN+3, Free trade agreement (FTA), Gravity model Introduction 1. Over the last decades, trade liberalization has become an inevitable trend, which is evidenced by the growing number of free trade agreements (FTA) under different regional and global framework. Indeed, it is the establishment of World Trade Organization (WTO) with the involvement of 161 members 2 that provides a convincing explanation for the benefits of opening markets with all those concerned. However, the Doha round of multilateral trade negotiations initiated in 2001 reached an impasse in 2012 (Evenett, 2012).Since the early of 1990s, the picture of international trade integration has been largely characterized by bilateral and regional free trade agreements (RTAs) (Yang & Martinez-Zarzoso, 2014). According to WTO statistics, 262 out of 449 RTAs which have been notified by WTO are presently in force by 2015 3 . East Asian is not an exception to the global trend of regional economic integration, characterized by the rapid expansion of international production and distribution networks within the region and the establishment of a number of FTAs. Being now considered as one of the most dynamic regions in the world, East Asian has proved itself that trade liberalization has made significant contributions to the economic growth for all members. Along with the inspiration of the worldwide emergence of regionalism, Association of South East Asian Nations (ASEAN) pioneered by the formation of ASEAN Free Trade Agreement (AFTA) in 1992 with an objective of accelerating trade flows within the market of approximately 600 million people. Additionally, ASEAN has paid much effort towards realizing ASEAN Economic Community by the end of 2015 to help ASEAN become a single market and production base, a highly competitive economic region and closer integration into the global economy. After the economic crisis in 1997, East Asian countries became more aware of the regional economic integration, accompanied by the economic dialogue and cooperation between 10 members of ASEAN and three Northeast Asian economies including China, Japan and the republic of Korea (hereafter referred as ASEAN+3). In particular, the FTAs for liberalization of trade in goods between ASEAN and China, 1 This article has been done under the research project QGTĈ 13.22 “ Assessing the economic integration process of Vietnam in ASEAN and ASEAN + 3 from 2013 to 2015 ” with the support from Vietnam National University. 2 https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm, accessed on May 15, 2015. 3 https://www.wto.org/english/tratop_e/region_e/region_e.htm , accessed on May 16, 2015