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Learning to Use Trade Agreements

Author

Listed:
  • Kala Krishna
  • Carlos Salamanca
  • Yuta Suzuki
  • Christian Volpe Martincus

Abstract

Preferential trade areas (PTAs) allow firms to pay zero or preferential tariffs as long as Rules of Origin (ROOs) are met. Meeting them is costly for exporters not only in terms of production costs but also in terms of fixed costs, such as documentation costs. We ask if these fixed costs change with the experience of exporters in obtaining preferential tariffs. We explore this using a unique exporter-importer matched transaction-level customs data set on a group of Latin American countries. We estimate a model-based equation and show that these fixed costs depend on the history of preference utilization.

Suggested Citation

  • Kala Krishna & Carlos Salamanca & Yuta Suzuki & Christian Volpe Martincus, 2021. "Learning to Use Trade Agreements," NBER Working Papers 29319, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29319
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    Citations

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    Cited by:

    1. Sonali Chowdhry & Gabriel Felbermayr, 2023. "Trade liberalization along the firm size distribution: The case of the EU‐South Korea FTA," Review of International Economics, Wiley Blackwell, vol. 31(5), pages 1751-1792, November.
    2. Ornelas, Emanuel & Turner, John L., 2024. "The costs and benefits of rules of origin in modern free trade agreements," Journal of International Economics, Elsevier, vol. 147(C).
    3. Dzmitry Kniahin & Jaime de Melo, 2022. "A Primer on Rules of Origin as Non-Tariff Barriers," JRFM, MDPI, vol. 15(7), pages 1-23, June.
    4. Head, Keith & Mayer, Thierry & Melitz, Marc, 2024. "The Laffer curve for rules of origin," Journal of International Economics, Elsevier, vol. 150(C).
    5. Marius Fossum & Inga Heiland & Viktor Moulin, 2024. "Analyzing the Expiration of the United States Generalized System of Preferences and Its Impact on Imports from Developing Countries," CESifo Working Paper Series 11509, CESifo.
    6. Legge, Stefan & Lukaszuk, Piotr, 2024. "The firm-level costs of utilizing free trade agreements," International Economics, Elsevier, vol. 178(C).

    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy
    • N76 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Latin America; Caribbean

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