 How well have free trade agreements performed in reducing non-tariff barriers?Tereza Rusova, Siobhan Prendiville and Samuel Jones No 333439, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Abstract: This paper analyses the effect of past FTAs on non-tariff measures (NTMs) as well as the impact of individual FTAs (EU-Korea, US-Korea) on NTMs across individual GTAP65 sectors. NTM reductions are a key input for CGE modelling and they tend to drive the majority of CGE results. This is because tariff rates across the world are already relatively low, and FTAs therefore mostly target non-tariff measures. Despite their central role in CGE modelling, NTM reductions are notoriously difficult to estimate, especially on a disaggregated level (such as GTAP65) and per individual agreement. In many cases, modellers are left to assume blanket NTM reductions across aggregated sectors, which does not allow for heterogeneous impact of FTAs at a sectoral level. This paper follows the approach set out by Baier et al (2019) and contributes to the existing literature on NTMs in two ways. Using a new tariff dataset developed by the UK Department for International Trade, we estimate the gravity model on a sectoral level and secondly, we break down the traditional group of “trade costs” into tariff and NTMs by controlling for the impact of tariffs. We present the changes in NTMs by their corresponding GTAP65 sector. Our model shows that an ‘average FTA’ reduced NTMs in under a half of modelled sectors, mostly agriculture and manufacturing. Conversely, many service sectors have seen an NTM increase under the ‘average’ FTA scenario. We also find that trade in services has been more impacted by the ability of technology to enable remotely delivery, compared to goods sectors. The results connected to individual FTAs tend to be of higher magnitude and we find that fewer results are significant. This is likely due to lower number of observations connected to individual agreements. Despite this, the results of both individual FTAs we examine (EU-Korea and US-Korea) are mostly in line with what the FTAs were expected to deliver in sectors that were the focus of the agreements. Keywords: International Relations/Trade; International Relations/Trade (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:333439 Access Statistics for this paper More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC. |
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