The Effect of ASEAN-China Free Trade Area (ACFTA) on Indonesia Export

ASEAN-China Free Trade Area (ACFTA) is an agreement between the members of ASEAN and China to create a free trade area by removing tariff and non-tariff barriers. This agreement begins with the signing of the agreement on November 5, 2002 in Phnom Penh. Implementation is done in phases beginning January 1, 2004. The purpose of this study determines the effect of the implementation of ACFTA on Indonesia's exports to the ASEAN countries and China. This study complements previous research regarding the ACFTA. The data used in this study are the data of Indonesian exports to ASEAN countries and China for 15 years from 2000 until 2014. The tests were conducted with a fixed effect panel data model with cross section SUR. The results of this study indicate that the ACFTA increase Indonesian exports to the ASEAN countries and China.DOI: 10.15408/etk.v15i2.3331


INTRODUCTION
The process of globalization has led to the free trade accompanied by a form of cooperation bilateral trade agreements, regional and multilateral. ASEAN-China Free Trade Area (ACFTA) is an agreement between the member countries of ASEAN and China to create a free trade area by removing tariff and non-tariff barriers. This agreement begins with the signing of the agreement on November 5, 2002 in Phnom Penh. As one of the FTA, ACFTA accepted as forms of mutual benefit of the countries that binding agreements based on the concept of comparative advantage. A country will specialize in producing products that have a comparative advantage so as to create efficiency output of products can be further improved. Figure 1 showed after the implementation of the ACFTA an increase of exports more than it was before the implementation of the ACFTA, Although Indonesia's exports to some countries are not so noticeable change in exports, namely to Brunei Darussalam and Laos. Before the implementation of ACFTA Singapore as export destination countries is in the first position compared to the ASEAN countries and China.
Prior to the implementation of the ACFTA, the United States ranks second as the main export destinations of Indonesia. After the implementation of ACFTA slowly position the United States as one of the main export destination countries shifted to China and Singapore. ASEAN countries certainly have a lot of potential to become an internasioanal trading partner of Indonesia because in one area. While China is currently the country with the second largest economy in the world, from 2000 to 2015, China's economic growth accounted for almost a third of global economic growth (IMF, 2016). Paulino and Thirwall (2004) measure the performance of export competitiveness and the world's income, using panel data to determine the impact of liberalization on export growth, the data are estimated using estimator fixed effect and model of generalized methods of moments (GMM), the result of liberalization to encourage export growth but is lower than the rise in import growth, liberalization also negatively affect the balance of trade and payments. Park and Estrada (2008) found an overall ACFTA will increase net trade, output and regional welfare. However, the impact of each country is very diverse, the big advantage to countries like Singapore, Malaysia, Indonesia and Thailand compared to other countries that are relatively poorer members such as Cambodia, Laos and Myanmar. Another study also states trade liberalization have positive impact on export performance (Thomas, et al 1991;Bleaney, 1999;Wu and Zeng, 2008).
However, there are also other researches that states liberalize trade only slightly greater impact on exports in the State to apply them (Lopez, 2005).

Figure 1. Export of Indonesia to ASEAN Countries and China 2000-2014
Source : www.bps.go.id (data processed) Several previous studies indicate that Indonesia has not been optimal in utilizing the ACFTA. Okamoto (2005) found in his research that Singapore and Malaysia gained the advantage of inter and intra-industry specialization, Thailand gain the advantage of intra-industry specialization, while Indonesia and the Philippines is not much gain from trade liberalization. Widyasanti (2010), which examined the impact of competitiveness Indonesia's exports after the Singapore and Malaysia gained the advantage of inter and intraindustry specialization while Thailand gain the advantage of intra-industry specialization. However, Indonesia and the Philippines is not much gain. Park et al 2 008 General Trade Analysis Project (GTAP) ACFTA as a whole will increase net trade, output and regional welfare. The impact of each country is very diverse, the big advantage to countries like Singapore, Malaysia, Indonesia, and Thailand compared to other countries that are relatively poorer members such as Cambodia, Laos and Myanmar. Widyasanti 2 008

Trade Indicator
Before ACFTA commodity of forest products occupy the top 10 commodities for export to China but after ACFTA forest commodities not included again as a favorite commodity. Ibrahim, Permata, dan Wibowo 2 010 General Trade Analysis Project (GTAP) ACFTA has the potential to increase exports of Indonesia.

Setiawan 2 012
ARIMA Indonesia has not been optimally utilize the ACFTA so as to obtain benefits that are less than the benefits of China.
Trade between countries occur because of differences in relative prices.
According to Krugman and Obstfeld (2003) the domestic demand for imports is an excess of what is required of consumers above that offered by domestic manufacturers, supply of foreign exports is an excess of what is offered by foreign manufacturers on requested by foreign consumers. To choose pooled or random effect in this study using Breusch Pagan LM test, the hypothesis is a H0 pooled and H1 random effects models. Based on the test results the conclusion is known that reject H0. It can be seen from the P-value = 0.00 < α, means the panel selected data model is random effect model.    Indonesia's Gross Domestic Product is the value of all goods and services produced within a certain time Indonesia. Where, in the event of an increase in the number of goods and services produced it will increase Indonesia's exports. The estimation results indicate that Indonesia's real GDP variable (lnpdbind) significant positive effect on Indonesia's exports to China with p-value 0.000 < α. Indonesia's export commodity prices significantly negative influence on Indonesian exports to the ASEAN countries and China. Rising commodity prices led to a decline of Indonesia's exports to the ASEAN countries and China. In accordance with the theory of demand, that rising prices reduce demand. Country trading partners will choose the lowest price of the alternative options for the price. Indonesia's real GDP increased demonstrate Indonesia's ability to produce export commodities also increased.

METHOD
Real GDP of the ASEAN countries and China have a significant positive effect on Indonesia's exports to the ASEAN countries and China. Increased revenue partner countries ACFTA will increase the purchasing power of the Indonesian export commodities. This is consistent with the theory demands that the increase in income will increase the demand for normal goods.
This study looked at the impact of ACFTA on Indonesia's international trade from the export side without looking at the impact on Indonesia's imports.
This is one of the limitations of this study and further research can do a comparison of ACFTA impact on exports and imports.
The increase in real GDP of partner countries ACFTA impact on Indonesian exports, according to the theory of demand that rising incomes will boost demand for commodities is assuming normal goods. However, Indonesia could not regulate the rise and fall of the purchasing power of other countries. The government needs to focus on improving the competitiveness of Indonesia's export commodities so that prices can be bought at a cheaper price compared to the same commodity from other countries. Indonesia's real GDP is the independent variable that also has a significant effect. There should be efforts to continuously increase real GDP