Impact of free trade agreement use on import prices

Kazunobu Hayakawa, Nuttawut Laksanapanyakul, Hiroshi Mukunoki and Shujiro Urata

No 8416, Policy Research Working Paper Series from The World Bank

Abstract: This paper examines the impact of free trade agreement (FTA) use on import prices. For this analysis, it employs establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, this paper estimates 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, a price rise resulting from the costs of complying with rules of origin was not found.

Keywords: International Trade and Trade Rules; Private Sector Economics; Investment and Investment Climate; Trade Policy; Inequality (search for similar items in EconPapers)
Date: 2018-04-19
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Impact of Free Trade Agreement Use on Import Prices (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:8416

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