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

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Keywords

  • free trade agreement
  • tariffs
  • Thailand

ASJC Scopus subject areas

  • Accounting
  • Development
  • Finance
  • Economics and Econometrics

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