Exporters' Response to FTA Tariff Preferences: Evidence from Thailand
This paper examines how the private sector responds to export opportunities induced by FTAs, using evidence from the Thai manufacturing sector during the period 2003-08. The core methodology is to undertake an inter-product panel-data econometric analysis to gain a better understanding of FTA utilization across products. Different from previous studies, it makes an explicit distinction between actual and preferential trade in which the latter is measured by the administrative records of FTA implementation. Our findings suggest that the product coverage is limited. Products that have benefited from FTA tariff preferences so far are highly concentrated. Our key finding from the econometric analysis is that as rules of origin (ROO) constraints are binding empirically, the ability to comply with ROO as well as tariff margin does matter in firms' decisions to use FTAs. The estimated cost in compiling ROO is equivalent to a tariff in the range of 2% to 10%. Besides, the FTA impact on exports is conditioned by trade volume during the pre-signing FTA period. The key policy inference is that it is unlikely to be able to promote exports by maximizing the number of FTAs, while ignoring the nature of FTA partners. The nature of the FTA partner does matter in establishing whether the signed FTA would be useful. In addition, for Japan and countries which are enthusiastic about FTAs as a mode for further liberalization, FTA negotiation on tariff cuts schedules must be undertaken in a more comprehensive way in which ROO and trade facilitation issues must be incorporated in the negotiation.
|Date of creation:||Jul 2010|
|Contact details of provider:|| Postal: 11th floor, Annex, Ministry of Economy, Trade and Industry (METI) 1-3-1, Kasumigaseki Chiyoda-ku, Tokyo, 100-8901|
Web page: http://www.rieti.go.jp/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:10039. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (NUKATANI Sorahiko)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.