Exploiting the Trade Potential from Integration: Analysing the Impact of Free Trade Agreements between ASEAN and India and China

In this article, we use the technique of stochastic frontier estimation for the structural gravity model to analyse Vietnam’s bilateral trade and evaluate its exploitation of trade efficiency before and after its free trade agreements (FTAs) with China and India entered into force. The results from Vietnam’s bilateral trade data between 2000 and 2015 show that the ASEAN–India Free Trade Agreement (AIFTA) has had a positive impact on Vietnam’s bilateral trade flows while we found a remarkably negative effect on Vietnam’s exports but not imports after the entry into force of the ASEAN-China Free Trade Agreement (ACFTA). In addition, Vietnam’s participation in the regional trade agreements (RTAs) and FTAs has significantly reduced the costs of trade over time, and these impacts on Vietnam’s imports are much higher than those on Vietnam's exports.