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Sensitive Sectors in Free Trade Agreements

Author

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  • Alan V. Deardorff

    (University of Michigan)

Abstract

This paper documents the presence of "sensitive sectors" in Free Trade Agreements, defined as sectors for which the within-FTA tariffs remain positive. The paper includes some brief theoretical discussion of the welfare implications of these, but the main emphasis is on reporting two measures of this phenomenon for countries in FTAs that entered into force between 1994 and 2003. One measure is the percentage of tariff lines that remain dutiable, and the second is the change, from before the FTA to after, in the average maximum (across 6-digit products) positive tariffs. Both measures are derived from data in the UNCTAD TRAINS database, and are then related to measures of country characteristics that might explain them. Low per capita GDP countries tend to have larger fractions of dutiable tariff lines, while higher income countries tend to post larger increases in average maximum positive tariffs. Both suggest that the favored treatment of sensitive sectors is undermining the potential gains from trade that FTAs could provide.

Suggested Citation

  • Alan V. Deardorff, 2018. "Sensitive Sectors in Free Trade Agreements," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 22(4), pages 403-425.
    • Handle: RePEc:ris:eaerev:0349
    DOI: 10.11644/KIEP.EAER.2018.22.4.349
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    Cited by:

    1. Alan V. Deardorff & Rishi R. Sharma, 2021. "Exempted sectors in free trade agreements," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 284-310, February.
    2. Nobuhiro Hosoe & Yuko Akune, 2019. "Can the Japanese Agri-food Sectors Survive by Promoting their Exports?:A General Equilibrium Analysis with Farm Heterogeneity and Product Differentiation," GRIPS Discussion Papers 19-06, National Graduate Institute for Policy Studies.
    3. Yaobin Liu & Weihui Hu & Kang Luo & Yan Guo & Zichang Wang, 2023. "How does digital trade promote and reallocate the export technology complexity of the manufacturing industry? Evidence from 30 Chinese provinces, 2011–2020," PLOS ONE, Public Library of Science, vol. 18(9), pages 1-23, September.
    4. Hosoe, Nobuhiro & Akune, Yuko, 2019. "Impact of Trade Liberalization on the Japanese Agri-food Sectors: A General Equilibrium Analysis with Farm Heterogeneity and Product Differentiation," Conference papers 333025, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item

    Keywords

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    JEL classification:

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

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