Regional Bilateral Trade Analysis of the European Union, China and ASEAN

This paper deals with the analysis and evaluation of bilateral trade flows between the European Union and ASEAN, and China and ASEAN. Many preferential trade agreements come into force in accordance with global efforts to liberalize trade. The European Union and China also negotiate to create preferential trade relations with ASEAN. The aim of this paper is to verify whether observed economies that form or plan to form a preferential area are natural trading partners or not and which economy has better position to create such agreement. The analysis uses indices of regional trade intensity and trade complementarity. The analysis clearly shows growing commercial dominance of China in Southeast Asia compared to the EU, but Chinese trade focus on the ASEAN countries weakens. From the perspective of trade complementarity it implies that the EU is more natural trading partner of ASEAN countries than China.