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

  • Chang, Kuo-I
  • Hayakawa, Kazunobu

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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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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  1. 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.
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  3. 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.
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  7. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
  8. 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.
  9. Demidova, Svetlana & Krishna, Kala, 2008. "Firm heterogeneity and firm behavior with conditional policies," Economics Letters, Elsevier, vol. 98(2), pages 122-128, February.
  10. Devashish Mitra, 1999. "Endogenous Lobby Formation and Endogenous Protection: A Long-Run Model of Trade Policy Determination," American Economic Review, American Economic Association, vol. 89(5), pages 1116-1134, December.
  11. Kishore Gawande & Pravin Krishna & Michael J. Robbins, 2006. "Foreign Lobbies and U.S. Trade Policy," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 563-571, August.
  12. 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.
  13. Richard E. Caves, 1976. "Economic Models of Political Choice: Canada's Tariff Structure," Canadian Journal of Economics, Canadian Economics Association, vol. 9(2), pages 278-300, May.
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  15. 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.
  16. Bombardini, Matilde, 2008. "Firm heterogeneity and lobby participation," Journal of International Economics, Elsevier, vol. 75(2), pages 329-348, July.
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