Impact of Free Trade Agreement Use on Import Prices

58 Pages Posted: 24 Apr 2018

See all articles by Kazunobu Hayakawa

Kazunobu Hayakawa

Institute of Developing Economies (IDE-JETRO)

Nuttawut Laksanapanyakul

Thailand Development Research Institute

Hiroshi Mukunoki

Gakushuin University - Economics

Shujiro Urata

Waseda University-Graduate School of Asia-Pacific Studies

Date Written: April 19, 2018

Abstract

This paper examines the impact of free trade agreement (FTA) use on import prices. For this analysis, it employs establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, this paper estimates 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, a price rise resulting from the costs of complying with rules of origin was not found.

Keywords: International Trade and Trade Rules, Private Sector Economics, Investment and Investment Climate, Trade Policy, Inequality

Suggested Citation

Hayakawa, Kazunobu and Laksanapanyakul, Nuttawut and Mukunoki, Hiroshi and Urata, Shujiro, Impact of Free Trade Agreement Use on Import Prices (April 19, 2018). World Bank Policy Research Working Paper No. 8416. Available at SSRN: https://ssrn.com/abstract=3165808

Kazunobu Hayakawa (Contact Author)

Institute of Developing Economies (IDE-JETRO) ( email )

3-2-2 Wakaba, Mihama-ku
Chiba, 261-8545
Japan

Nuttawut Laksanapanyakul

Thailand Development Research Institute ( email )

United States

Hiroshi Mukunoki

Gakushuin University - Economics ( email )

1-5-1 Mejiro, Toshima-ku
Tokyo, 171-8588
Japan
+81-3-5992-1275 (Phone)
+81-3-5992-1007 (Fax)

HOME PAGE: http://sites.google.com/site/hiroshimukunoki/

Shujiro Urata

Waseda University-Graduate School of Asia-Pacific Studies ( email )

1-21-1 Nishiwaseda
Shinjuku-ku, Tokyo 169-8050
Japan

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