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Impact of Free Trade Agreement Use on Import Prices

Kazunobu Hayakawa (), Nuttawut Laksanapanyakul, Hiroshi Mukunoki and Shujiro Urata

World Bank Economic Review, 2019, vol. 33, issue 3, 643-660

Abstract: We examine the impact of free trade agreement (FTA) use on import prices. For this analysis, we employ establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, we estimate the effects of FTA use on prices by controlling for differences in importing-firm characteristics. There are three main findings. First, the effect of FTA use is overestimated when not controlling for importing firm-related fixed effects. Second, on average, firms’ FTA use reduces tariffs by 12 percentage points and raises import prices by 3.6–6.7 percent. Third, in general, we do not find a price rise resulting from the costs of complying with rules of origin.

Keywords: free trade agreement; Thailand; tariffs (search for similar items in EconPapers)
Date: 2019
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