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Choosing Between Multiple Preferential Tariff Schemes: Evidence from Japan's imports

Kazunobu Hayakawa (), Shujiro Urata and Taiyo Yoshimi ()

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: Mega regional trade agreements (RTAs), such as the Trans-Pacific Partnership, are likely to overlap with existing RTA networks. When RTA networks overlap, firms are required to choose from multiple RTA schemes when they trade. This study investigates how RTA tariff rates affect the use of both own and other tariff schemes when multiple RTA schemes are available. We first theoretically explore such choice and derive some propositions. Then, we empirically test those propositions for Japan's imports because Japan already has not only bilateral but also multilateral RTAs with some Association of Southeast Asian Nations (ASEAN) countries. The key finding is that the utilization rate of an RTA scheme is higher when its preferential rates are lower compared to the rates in the other RTAs.

New Economics Papers: this item is included in nep-int and nep-sea
Date: 2017-01
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