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Measuring fixed costs for firms' use of a free trade agreement : threshold regression approach

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  • Hayakawa, Kazunobu
Abstract
In this paper, by employing the threshold regression method, we estimate the average tariffequivalent of fixed costs for the use of a free trade agreement (FTA) among all existing FTAs inthe world. It is estimated to be 3.2%. This global estimate serves as a reference rate in theevaluation of each FTA’s fixed costs.

Suggested Citation

  • Hayakawa, Kazunobu, 2011. "Measuring fixed costs for firms' use of a free trade agreement : threshold regression approach," IDE Discussion Papers 275, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper275
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    References listed on IDEAS

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    1. José Anson & Olivier Cadot & Antoni Estevadeordal & Jaime de Melo & Akiko Suwa‐Eisenmann & Bolormaa Tumurchudur, 2005. "Rules of Origin in North–South Preferential Trading Arrangements with an Application to NAFTA," Review of International Economics, Wiley Blackwell, vol. 13(3), pages 501-517, August.
    2. Olivier Cadot & Jaime de Melo, 2015. "Why OECD Countries Should Reform Rules of Origin," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 16, pages 381-409, World Scientific Publishing Co. Pte. Ltd..
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    4. Joseph Francois & Bernard Hoekman & Miriam Manchin, 2006. "Preference Erosion and Multilateral Trade Liberalization," The World Bank Economic Review, World Bank, vol. 20(2), pages 197-216.
    5. Céline Carrère & Jaime de Melo, 2015. "Are Different Rules of Origin Equally Costly? Estimates from NAFTA," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 12, pages 277-298, World Scientific Publishing Co. Pte. Ltd..
    6. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 441-487.
    7. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    8. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    9. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    10. Denis Medvedev, 2010. "Preferential trade agreements and their role in world trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(2), pages 199-222, June.
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    Cited by:

    1. HAYAKAWA Kazunobu & URATA Shujiro & YOSHIMI Taiyo, 2017. "Choosing Between Multiple Preferential Tariff Schemes: Evidence from Japan's imports," Discussion papers 17002, Research Institute of Economy, Trade and Industry (RIETI).
    2. Kazunobu Hayakawa & Nuttawut Laksanapanyakul & Shujiro Urata, 2016. "Measuring the costs of FTA utilization: evidence from transaction-level import data of Thailand," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(3), pages 559-575, August.
    3. Ulloa, Alfie & Wagner, Rodrigo, 2012. "Why don't All Exporters Benefit from Free Trade Agreements?: Estimating Utilization Costs," IDB Publications (Working Papers) 4635, Inter-American Development Bank.
    4. Kazunobu Hayakawa & Nuttawut Laksanapanyakul & Hiroshi Mukunoki & Shujiro Urata, 2016. "Impact of Free Trade Agreement Utilisation on Import Prices," Working Papers DP-2016-24, Economic Research Institute for ASEAN and East Asia (ERIA).
    5. Hayakawa, Kazunobu, 2014. "Impact of diagonal cumulation rule on FTA utilization: Evidence from bilateral and multilateral FTAs between Japan and Thailand," Journal of the Japanese and International Economies, Elsevier, vol. 32(C), pages 1-16.
    6. Hayakawa Kazunobu, 2015. "Impacts of FTA Utilization on Firm Performance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 1325-1352, July.
    7. Chang, Kuo-I & Hayakawa, Kazunobu, 2012. "Selection and utilization of the early harvest list : evidence from the Free Trade Agreement between China and Taiwan," IDE Discussion Papers 365, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Felipe Benguria, 2022. "Do US exporters take advantage of free trade agreements? Evidence from the US‐Colombia free trade agreement," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1148-1179, September.
    9. Kazunobu Hayakawa & Nuttawut Laksanapanyakul & Taiyo Yoshimi, 2021. "Tariff scheme choice," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(2), pages 323-346, May.
    10. Zhifan Chen & Wencai Geng & Xingyuan Jiang & Xinling Ruan & Di Wu & Yipeng Li, 2022. "A New Sight of Influencing Effects of Major Factors on Cd Transfer from Soil to Wheat ( Triticum aestivum L.): Based on Threshold Regression Model," IJERPH, MDPI, vol. 19(19), pages 1-15, September.
    11. Kazunobu Hayakawa, 2020. "Production Networks and Utilization of Free Trade Agreements by Japanese Subsidiaries in ASEAN," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 16(1), pages 121-134, February.
    12. Margalida Murillo & Cindy Paola Leal, 2021. "Tratados de Libre Comercio y duración de las exportaciones: Evidencia a nivel de firma para Colombia," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 88(6), pages 201-238, July.
    13. Legge, Stefan & Lukaszuk, Piotr, 2024. "The firm-level costs of utilizing free trade agreements," International Economics, Elsevier, vol. 178(C).

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    More about this item

    Keywords

    Costs; Exports; Business; FTA; Gravity equation; Threshold regression;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F19 - International Economics - - Trade - - - Other
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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