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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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    File URL: https://ir.ide.go.jp/record/37729/files/IDP000446_001.pdf
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    2. 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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    4. 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.
    5. 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.

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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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