Impact of Free Trade Agreement Use on Import Prices

Kazunobu Hayakawa, Nuttawut Laksanapanyakul, Hiroshi Mukunoki, Shujiro Urata

Research output: Contribution to journalArticle

Abstract

We examine the impact of free trade agreement (FTA) use on import prices. For this analysis, we employ establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, we estimate 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, we do not find a price rise resulting from the costs of complying with rules of origin.

Original languageEnglish
Pages (from-to)643-660
Number of pages18
JournalWorld Bank Economic Review
Volume33
Issue number3
DOIs
Publication statusPublished - 2019 Oct 1

Fingerprint

free trade
import
firm
price
Free trade agreements
Import prices
costs
cost
effect
Importing

Keywords

  • free trade agreement
  • tariffs
  • Thailand

ASJC Scopus subject areas

  • Accounting
  • Development
  • Finance
  • Economics and Econometrics

Cite this

Impact of Free Trade Agreement Use on Import Prices. / Hayakawa, Kazunobu; Laksanapanyakul, Nuttawut; Mukunoki, Hiroshi; Urata, Shujiro.

In: World Bank Economic Review, Vol. 33, No. 3, 01.10.2019, p. 643-660.

Research output: Contribution to journalArticle

Hayakawa, K, Laksanapanyakul, N, Mukunoki, H & Urata, S 2019, 'Impact of Free Trade Agreement Use on Import Prices', World Bank Economic Review, vol. 33, no. 3, pp. 643-660. https://doi.org/10.1093/wber/lhx026
Hayakawa, Kazunobu ; Laksanapanyakul, Nuttawut ; Mukunoki, Hiroshi ; Urata, Shujiro. / Impact of Free Trade Agreement Use on Import Prices. In: World Bank Economic Review. 2019 ; Vol. 33, No. 3. pp. 643-660.
@article{1d795d4cc81c4765991bcfe2d76dbcaf,
title = "Impact of Free Trade Agreement Use on Import Prices",
abstract = "We examine the impact of free trade agreement (FTA) use on import prices. For this analysis, we employ establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, we estimate 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, we do not find a price rise resulting from the costs of complying with rules of origin.",
keywords = "free trade agreement, tariffs, Thailand",
author = "Kazunobu Hayakawa and Nuttawut Laksanapanyakul and Hiroshi Mukunoki and Shujiro Urata",
year = "2019",
month = "10",
day = "1",
doi = "10.1093/wber/lhx026",
language = "English",
volume = "33",
pages = "643--660",
journal = "World Bank Economic Review",
issn = "0258-6770",
publisher = "Oxford University Press",
number = "3",

}

TY - JOUR

T1 - Impact of Free Trade Agreement Use on Import Prices

AU - Hayakawa, Kazunobu

AU - Laksanapanyakul, Nuttawut

AU - Mukunoki, Hiroshi

AU - Urata, Shujiro

PY - 2019/10/1

Y1 - 2019/10/1

N2 - We examine the impact of free trade agreement (FTA) use on import prices. For this analysis, we employ establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, we estimate 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, we do not find a price rise resulting from the costs of complying with rules of origin.

AB - We examine the impact of free trade agreement (FTA) use on import prices. For this analysis, we employ establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, we estimate 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, we do not find a price rise resulting from the costs of complying with rules of origin.

KW - free trade agreement

KW - tariffs

KW - Thailand

UR - http://www.scopus.com/inward/record.url?scp=85073394018&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85073394018&partnerID=8YFLogxK

U2 - 10.1093/wber/lhx026

DO - 10.1093/wber/lhx026

M3 - Article

AN - SCOPUS:85073394018

VL - 33

SP - 643

EP - 660

JO - World Bank Economic Review

JF - World Bank Economic Review

SN - 0258-6770

IS - 3

ER -