A New Approach for Quantifying the Costs of Utilizing Regional Trade Agreements
Naoto Jinji (),
Kazunobu Hayakawa (),
Toshiyuki Matsuura () and
Taiyo Yoshimi ()
Discussion papers from Graduate School of Economics , Kyoto University
This study proposes a new approach for quantifying two kinds of costs related to the utilization of regional trade agreements (RTAs). The first, which we call the “procurement adjustment cost,” represents the cost involved in meeting rules of origin through the adjustment of procurement sources. The second is the additional fixed costs required to utilize RTAs, including document preparation costs for the certification of origin. The proposed approach makes it possible to compute these two costs separately using product-level data. It is built on a model of international trade where heterogeneous exporters decide which tariff scheme to use. Applying our approach to Thailand’s imports from China, our estimates suggest that procurement adjustment costs to comply with RTA rules of origin at the median are equivalent to 4% of per-unit production costs. In addition, RTA utilization requires an additional 27% of fixed costs. Furthermore, simulation analysis shows that a reduction of the additional fixed costs by half would raise the RTA utilization rate by 13 percentage points, while the complete elimination of procurement adjustment costs would raise the RTA utilization rate by 32 percentage points.
Keywords: Regional trade agreement; Preference utilization; Cost estimation (search for similar items in EconPapers)
JEL-codes: F15 F53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kue:epaper:e-19-010
Access Statistics for this paper
More papers in Discussion papers from Graduate School of Economics , Kyoto University Contact information at EDIRC.
Bibliographic data for series maintained by Graduate School of Economics Project Center ().