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Impact of free trade agreement use on import prices

Author

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  • Hayakawa,Kazunobu
  • Laksanapanyakul,Nuttawut
  • Mukunoki,Hiroshi
  • Urata,Shujiro

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.

Suggested Citation

  • Hayakawa,Kazunobu & Laksanapanyakul,Nuttawut & Mukunoki,Hiroshi & Urata,Shujiro, 2018. "Impact of free trade agreement use on import prices," Policy Research Working Paper Series 8416, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8416
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    Cited by:

    1. Hiroshi Mukunoki & Hirofumi Okoshi, 2021. "Rules of origin and consumer‐hurting free trade agreements," The World Economy, Wiley Blackwell, vol. 44(8), pages 2303-2318, August.
    2. Kazunobu Hayakawa, 2020. "Production Networks and Utilization of Free Trade Agreements by Japanese Subsidiaries in ASEAN," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 16(1), pages 121-134, February.
    3. Kjersti Nes & K. Aleks Schaefer & Daniel P. Scheitrum, 2022. "Global Food Trade and the Costs of Non‐Adoption of Genetic Engineering," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(1), pages 70-91, January.

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