ASEAN in Global Value Chains: The Effects of Deep Trade Agreements on Value-Added Trade

This thesis investigates the role of trade agreements on global value chains (GVCs) in the context of ASEAN countries. Trade in value added is considered as a close proxy for the extent of trade taking place within the GVCs. In this thesis, three distinct measures of value-added trade at the sectoral level are used: domestic value added (DVA) in gross exports, DVA in intermediates exports, and DVA in final goods exports. In terms of trade agreements, I explicitly address the heterogeneity in their design by computing a series of depth indices based on coverage and legal enforceability. I estimate an augmented gravity equation to investigate whether the composition of trade agreements is relevant for ASEAN’s integration in GVCs. The results suggest that adding policy areas to a trade agreement increase GVCs-related trade among participating countries. More specifically, the effect is driven by value-added in intermediates rather than traditional final goods trade. The content of the trade agreements also matters to trade and varies by WTO membership status of trading partners. Legally enforceable provisions that are under the current scope of WTO mandate have a stronger impact on trade than those beyond WTO regulation. The positive impact of deep trade agreements on ASEAN trade is subject to phase-in effects of up to 10 years after the agreement is enforced.