Enhancing Bilateral Economic Linkages Through New Regionalism: The Case of the Agreement Between New Zealand and Singapore for a Closer Economic Partnership (ANZSCEP)

With ASEAN economies recovering from the economic crisis of 1997-98, and largely unsuccessful efforts towards trade and investment liberalization in multilateral and regional fora, viz. the WTO and APEC, bilateralism has emerged as the most preferred option to advance free trade goals among major Asian economies. Singapore, being one of the most open economies has been the major proponent of this trend, pursuing bilateralism as a major instrument of its commercial trade strategy through its moves to engage in FTAs with its major trading partners. In this context, ANZSCEP that came into force since January 2001 has been one of the first such comprehensive bilateral FTAs that was ever signed involving an ASEAN country. As is the case with any FTA, the primary aim of this agreement was to liberalize trade and investment flows between the two countries and strengthen bilateral economic linkages.
          This paper aims to assess the early effects of the ANZSCEP on bilateral economic linkages between Singapore and New Zealand not only with respect to merchandise trade, but also in the area of trade in services and investment flows using both macro and micro data. This has hitherto not been attempted in previous studies that have largely restricted the analysis to merchandise trade flows. The paper employs traditional intensity indices to analyse these linkages. The study yields important policy implementation for the ANZSCEP and other rapidly proliferating bilateral FTAs in the region.