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How do free trade agreements reduce tariff rates and non-tariff barriers?

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  • Hayakawa, Kazunobu
  • Kimura, Fukunari

Abstract

This paper empirically investigates how far free trade agreements (FTAs) successfully lower tariff rates and non-tariff barriers (NTBs) for manufacturing industries by employing the bilateral tariff and NTB data in a time series for countries around the world. We find that FTAs under GATT Article XXIV and the Enabling Clause contribute to reducing tariff rates by 2.1% points and 1.5% points, respectively. In the case of NTBs, their respective impacts are 6.6% points and 5.7% points. Membership in the World Trade Organization (WTO) does not contribute greatly to reducing tariff rates but does play a significant role in reducing NTBs. These results provide important implications for the literature on numerical assessments of FTAs.

Suggested Citation

  • Hayakawa, Kazunobu & Kimura, Fukunari, 2014. "How do free trade agreements reduce tariff rates and non-tariff barriers?," IDE Discussion Papers 446, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper446
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    2. Ikumo Isono & Satoru Kumagai, 2016. "Economic Impacts of Improved Connectivity for ASEAN: An Application of the Geographical Simulation Model," Asian Economic Policy Review, Japan Center for Economic Research, vol. 11(2), pages 290-306, July.
    3. Hiro Lee & Ken Itakura, 2015. "Applied General Equilibrium Analysis of Mega-Regional Free Trade Initiatives in the Asia-Pacific," OSIPP Discussion Paper 15E001, Osaka School of International Public Policy, Osaka University.
    4. Lee, Siu Ming & Adam, Radziah & Tuan Lonik, Ku’ Azam, 2020. "The Effects of Tax and Promotion on Rubber Medical Devices Export," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 54(2), pages 29-40.
    5. Hiro Lee & Ken Itakura, 2014. "TPP, RCEP, and Japan's Agricultural Policy Reforms," OSIPP Discussion Paper 14E003, Osaka School of International Public Policy, Osaka University.

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    More about this item

    Keywords

    International trade; Trade policy; Tariff; Non-tariff barriers; Free Trade Agreement (FTA);
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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