IDEAS home Printed from https://ideas.repec.org/a/kap/openec/v26y2015i4p711-729.html
   My bibliography  Save this article

How Much Do Free Trade Agreements Reduce Impediments to Trade?

Author

Listed:
  • Kazunobu Hayakawa
  • Fukunari Kimura

Abstract

This paper empirically investigates how far free trade agreements (FTAs) successfully lower tariff rates and non-tariff barriers (NTBs) for manufacturing industries by employing the bilateral tariff and NTB data in time series for countries in the world. We find that FTAs under GATT Article XXIV and the Enabling Clause are associated with the 2.0 and 1.5 % lower tariff rates, respectively. In the case of NTBs, on the other hand, their respective effects are 2.1 and 2.4 %. Also, compared with these effects of FTAs, WTO membership does not have large effects on tariff rates but does have them on NTBs. These results provide important implication for the literature on the numerical assessment of FTAs. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Kazunobu Hayakawa & Fukunari Kimura, 2015. "How Much Do Free Trade Agreements Reduce Impediments to Trade?," Open Economies Review, Springer, vol. 26(4), pages 711-729, September.
    • Handle: RePEc:kap:openec:v:26:y:2015:i:4:p:711-729
    DOI: 10.1007/s11079-014-9332-x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11079-014-9332-x
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11079-014-9332-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
    2. Antoni Estevadeordal & Caroline Freund & Emanuel Ornelas, 2008. "Does Regionalism Affect Trade Liberalization Toward Nonmembers?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(4), pages 1531-1575.
    3. Nuno Limão, 2018. "Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the United States," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 13, pages 353-371, World Scientific Publishing Co. Pte. Ltd..
    4. Winchester, Niven, 2009. "Is there a dirty little secret? Non-tariff barriers and the gains from trade," Journal of Policy Modeling, Elsevier, vol. 31(6), pages 819-834, November.
    5. Chang, Pao-Li & Lee, Myoung-Jae, 2011. "The WTO trade effect," Journal of International Economics, Elsevier, vol. 85(1), pages 53-71, September.
    6. Gabriel Felbermayr & Benjamin Jung, 2011. "Sorting It Out: Technical Barriers to Trade and Industry Productivity," Open Economies Review, Springer, vol. 22(1), pages 93-117, February.
    7. Guglielmo Caporale & Christophe Rault & Robert Sova & Anamaria Sova, 2009. "On the bilateral trade effects of free trade agreements between the EU-15 and the CEEC-4 countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 573-573, October.
    8. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    9. Hans-Jurgen Engelbrecht & Christopher Pearce, 2007. "The GATT/WTO has promoted trade, but only in capital-intensive commodities!," Applied Economics, Taylor & Francis Journals, vol. 39(12), pages 1573-1581.
    10. Subramanian, Arvind & Wei, Shang-Jin, 2007. "The WTO promotes trade, strongly but unevenly," Journal of International Economics, Elsevier, vol. 72(1), pages 151-175, May.
    11. Vincent Vicard, 2009. "On trade creation and regional trade agreements: does depth matter?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 167-187, July.
    12. Denis Medvedev, 2010. "Preferential trade agreements and their role in world trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(2), pages 199-222, June.
    13. Jayjit Roy, 2010. "Do Customs Union Members Engage in More Bilateral Trade than Free‐Trade Agreement Members?," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 663-681, September.
    14. Hayakawa, Kazunobu, 2013. "How serious is the omission of bilateral tariff rates in gravity?," Journal of the Japanese and International Economies, Elsevier, vol. 27(C), pages 81-94.
    15. Michael G. Plummer & Ganeshan Wignaraja, 2006. "The Post-Crisis Sequencing of Economic Integration in Asia: Trade as a Complement to a Monetary Future," Economie Internationale, CEPII research center, issue 107, pages 59-85.
    16. Dennis Novy, 2013. "Gravity Redux: Measuring International Trade Costs With Panel Data," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 101-121, January.
    17. Kyle Bagwell & Robert W. Staiger, 2011. "What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization," American Economic Review, American Economic Association, vol. 101(4), pages 1238-1273, June.
    18. Baybars Karacaovali & Nuno Limão, 2018. "The clash of liberalizations: Preferential vs. multilateral trade liberalization in the European Union," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 14, pages 373-401, World Scientific Publishing Co. Pte. Ltd..
    19. E. Baldwin, Richard & Seghezza, Elena, 2010. "Are Trade Blocs Building or Stumbling Blocs?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 276-297.
    20. Park, Innwon & Park, Soonchan, 2009. "Consolidation and Harmonization of Regional Trade Agreements (RTAs): A Path Toward Global Free Trade," MPRA Paper 14217, University Library of Munich, Germany, revised 23 Mar 2009.
    21. Baldwin, Richard E. & Venables, Anthony J., 1995. "Regional economic integration," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 31, pages 1597-1644, Elsevier.
    22. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    23. Demidova, Svetlana & Krishna, Kala, 2008. "Firm heterogeneity and firm behavior with conditional policies," Economics Letters, Elsevier, vol. 98(2), pages 122-128, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kazunobu Hayakawa & Tadashi Ito & Fukunari Kimura, 2016. "Trade Creation Effects of Regional Trade Agreements: Tariff Reduction versus Non-tariff Barrier Removal," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 317-326, February.
    2. Stender, Frederik & Vogel, Tim, 2023. "What role for aid for trade in (deep) PTA relations? Empirical evidence from gravity model estimations," IDOS Discussion Papers 13/2023, German Institute of Development and Sustainability (IDOS).
    3. Gokan,Toshitaka & Kumagai,Satoru & Hayakawa,Kazunobu & Tsubota,Kenmei & Isono,Ikumo & Keola,Souknilanh & Kubo,Hiroya, 2024. "Economic Impacts of the blockage of the Suez Canal: an Analysis by IDE-GSM," IDE Discussion Papers 919, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Fiankor, Dela-Dem Doe & Ehrich, Malte & Brümmer, Bernhard, 2016. "EU-African Regional Trade Agreements as a Development Tool to Reduce EU Border Rejections," GlobalFood Discussion Papers 244352, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    5. Svetlov, Nikolai (Светов, Николай) & Shishkina, Ekaterina (Шишкина, Екатерина), 2016. "Economic and Mathematical Modeling of EAEC Agri-food Policy [Экономико-Математическое Моделирование Агро- Продовольственной Политики Еаэс]," Working Papers 767, Russian Presidential Academy of National Economy and Public Administration.
    6. Timini, Jacopo & Conesa, Marina, 2019. "Chinese Exports and Non-Tariff Measures: Testing for Heterogeneous Effects at the Product Level," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 34(2), pages 327-345.
    7. Satoru Kumagai & Toshitaka Gokan & Kenmei Tsubota & Ikumo Isono & Kazunobu Hayakawa, 2021. "Economic Impacts of the US–China Trade War on the Asian Economy: An Applied Analysis of IDE-GSM," Journal of Asian Economic Integration, , vol. 3(2), pages 127-143, September.
    8. Aruna Gounder & Rod Falvey & Gulasekaran Rajaguru, 2019. "The Effects of Preferential Trade Agreements on Foreign Direct Investment: Evidence from the African Caribbean Pacific Region," Open Economies Review, Springer, vol. 30(4), pages 695-717, September.
    9. Russel Kingshott & Piyush Sharma & Peter Hosie & Nebojsa Davcik, 2019. "Interactive impact of ethnic distance and cultural familiarity on the perceived effects of free trade agreements," Asia Pacific Journal of Management, Springer, vol. 36(1), pages 135-160, March.
    10. Tareg Ghazi Alghabbabsheh & Saleh Saud AlSaif & Md Saiful Islam & Tareq Saeed AlShammari & Ali M A Mahmoud, 2022. "Have Bilateral Free Trade Agreements (BFTAs) been beneficial? Lessons learned from 11 U.S. BFTAs between 1992 and 2017," PLOS ONE, Public Library of Science, vol. 17(4), pages 1-21, April.
    11. Dr. Caroline Ntara, 2022. "What Does Africa Stand to Gain from the African Continental Free Trade Area?," International Journal of Science and Business, IJSAB International, vol. 16(1), pages 69-90.
    12. Nuno Limão, 2016. "Preferential Trade Agreements," NBER Working Papers 22138, National Bureau of Economic Research, Inc.
    13. Ken Itakura, . "Assessing the Economic Effects of the Regional Comprehensive Economic Partnership on ASEAN Member States," Chapters, in: Lili Yan Ing (ed.), East Asian Integration (First Edition), chapter 1, pages 1-24, Economic Research Institute for ASEAN and East Asia (ERIA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hayakawa, Kazunobu & Kimura, Fukunari, 2014. "How do free trade agreements reduce tariff rates and non-tariff barriers?," IDE Discussion Papers 446, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Nuno Limão, 2016. "Preferential Trade Agreements," NBER Working Papers 22138, National Bureau of Economic Research, Inc.
    3. Maggi, Giovanni, 2014. "International Trade Agreements," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 317-390, Elsevier.
    4. Chad P. Bown & Patricia Tovar, 2016. "Preferential Liberalization, Antidumping, and Safeguards: Stumbling Block Evidence from MERCOSUR," Economics and Politics, Wiley Blackwell, vol. 28(3), pages 262-294, November.
    5. Hayakawa Kazunobu, 2015. "Impacts of FTA Utilization on Firm Performance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 1325-1352, July.
    6. Hayakawa, Kazunobu & Kim, HanSung & Yoshimi, Taiyo, 2015. "FTA in international finance : impacts of exchange rates on FTA utilization," IDE Discussion Papers 494, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    7. Hayakawa, Kazunobu & Kim, Han-Sung & Yoshimi, Taiyo, 2017. "Exchange rate and utilization of free trade agreements: Focus on rules of origin," Journal of International Money and Finance, Elsevier, vol. 75(C), pages 93-108.
    8. Hayakawa, Kazunobu & Yoshimi, Taiyo, 2016. "Gravity with multiple tariff schemes," IDE Discussion Papers 614, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    9. Jaime DE MELO & Marcelo OLARREAGA, 2017. "Trade Related Institutions and Development," Working Papers P199, FERDI.
    10. Atika Benaddi & Peri Silva, 2022. "The multilateral trade policy of the Arab league countries: An empirical investigation," The World Economy, Wiley Blackwell, vol. 45(11), pages 3420-3450, November.
    11. Florian Mölders & Ulrich Volz, 2011. "Trade creation and the status of FTAs: empirical evidence from East Asia," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 429-456, September.
    12. Bown,Chad P. & Crowley,Meredith A & Bown,Chad P. & Crowley,Meredith A, 2016. "The empirical landscape of trade policy," Policy Research Working Paper Series 7620, The World Bank.
    13. Jayjit Roy, 2014. "On the robustness of the trade-inducing effects of trade agreements and currency unions," Empirical Economics, Springer, vol. 47(1), pages 253-304, August.
    14. Kazunobu Hayakawa & Tadashi Ito & Fukunari Kimura, 2016. "Trade Creation Effects of Regional Trade Agreements: Tariff Reduction versus Non-tariff Barrier Removal," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 317-326, February.
    15. Bown, Chad P., 2014. "Trade policy instruments over time," Policy Research Working Paper Series 6757, The World Bank.
    16. Kym Anderson, 2016. "Contributions Of The Gatt/Wto To Global Economic Welfare: Empirical Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 30(1), pages 56-92, February.
    17. Fugazza, Marco & Nicita, Alessandro, 2013. "The direct and relative effects of preferential market access," Journal of International Economics, Elsevier, vol. 89(2), pages 357-368.
    18. Emanuel Ornelas, 2016. "Special and Differential Treatment for Developing Countries," CESifo Working Paper Series 5823, CESifo.
    19. Yuan Li & John C. Beghin, 2017. "A meta-analysis of estimates of the impact of technical barriers to trade," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 4, pages 63-77, World Scientific Publishing Co. Pte. Ltd..
    20. Ornelas, Emanuel & Tovar, Patricia, 2022. "Intra-bloc tariffs and preferential margins in trade agreements," Journal of International Economics, Elsevier, vol. 138(C).

    More about this item

    Keywords

    Tariff rates; Non-tariff barriers; Free Trade Agreement; World Trade Organization; Simulation; F10; F13; F15;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:openec:v:26:y:2015:i:4:p:711-729. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.