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Selection and utilization of the early harvest list : evidence from the Free Trade Agreement between China and Taiwan

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  • Chang, Kuo-I
  • Hayakawa, Kazunobu

Abstract

In this paper, we conducted an empirical investigation into the determinants of FTA utilization in exports from Taiwan to China. To do this, we first estimated the selection equation to see what kinds of products are included in the early harvest list. As a result, we found that Taiwan includes products with a medium magnitude of benefits from tariff removal in the early harvest list. Taiwan also includes products for which ASEAN countries have better access to the China market. We then estimated the equation for the determinants of FTA utilization by introducing an inverse of the Mills ratio estimated in the selection equation. The findings are that, as usual, the FTA rates are more likely to be utilized for products with a larger tariff margin. In addition, some rules of origin are found to be relatively restrictive in terms of discouraging trade.

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File URL: http://ir.ide.go.jp/dspace/bitstream/2344/1169/1/ARRIDE_Discussion_No.365_chang.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 365.

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Date of creation: Aug 2012
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Publication status: Published in IDE Discussion Paper. No. 365. 2012.8
Handle: RePEc:jet:dpaper:dpaper365

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Related research

Keywords: China; Taiwan; International trade; FTA; International economic integration; Utilization;

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  1. Miriam Manchin, 2004. "Preference Utilisation and Tariff Reduction in EU Imports from ACP Countries," Tinbergen Institute Discussion Papers 04-132/2, Tinbergen Institute.
  2. Joseph Francois & B. Hoekman & M. Manchin, 2005. "Preference Erosion and Multilateral Trade Liberalization," The Institute for International Integration Studies Discussion Paper Series iiisdp87, IIIS.
  3. Céline Carrere & Olivier Cadot & Jaime Melo De & Bolormaa Tumurchudur, 2011. "Product Specific Rules of Origin in EU and US Preferential Trading Arrangements: An Assessment," Working Papers halshs-00564704, HAL.
  4. Kun-Ming Chen & Meng-Chia Tsai & Chia-Ching Lin & Chaw-hsia Tu, 2009. "Impact of Cross-Strait Trade Liberalization: A Computable General Equilibrium Analysis," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(6), pages 106-122.
  5. Pincus, J J, 1975. "Pressure Groups and the Pattern of Tariffs," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 757-78, August.
  6. Kishore Gawande & Pravin Krishna & Michael J. Robbins, 2004. "Foreign Lobbies and US Trade Policy," NBER Working Papers 10205, National Bureau of Economic Research, Inc.
  7. Hayakawa, Kazunobu, 2011. "Measuring fixed costs for firms’ use of a free trade agreement: Threshold regression approach," Economics Letters, Elsevier, vol. 113(3), pages 301-303.
  8. Tsai-Lung Hong & Chih-Hai Yang, 2011. "The Economic Cooperation Framework Agreement between China and Taiwan: Understanding Its Economics and Politics," Asian Economic Papers, MIT Press, vol. 10(3), pages 79-96, October.
  9. Svetlana Demidova & Kala Krishna, 2007. "Firm Heterogeneity and Firm Behavior with Conditional Policies," NBER Working Papers 12950, National Bureau of Economic Research, Inc.
  10. Jean-Christophe Bureau & Raja Chakir & Jacques Gallezot, 2007. "The Utilisation of EU and US Trade Preferences for Developing Countries in the Agri-Food Sector," The Institute for International Integration Studies Discussion Paper Series iiisdp193, IIIS.
  11. Jean-Christophe Bureau & Raja Chakir & Jacques Gallezot, 2007. "The Utilisation of Trade Preferences for Developing Countries in the Agri-food Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(2), pages 175-198, 06.
  12. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
  13. Bombardini, Matilde, 2008. "Firm heterogeneity and lobby participation," Journal of International Economics, Elsevier, vol. 75(2), pages 329-348, July.
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