Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, June 27, 2018

Impact of Free Trade Agreement Use on Import Prices

Kazunobu Hayakawa, Nuttawut Laksanapanyakul, Hiroshi Mukunoki, and Shujiro Urata study the Impact of Free Trade Agreement Use on Import Prices.

ABSTRACT: We examine the impact of free trade agreement (FTA) use on import prices. For this analysis, we employ establishment-level import data with information on tariff schemes, that is, the FTA and most-favored-nation schemes used for importing. Unlike previous studies, we estimate 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, we do not find a price rise resulting from the costs of complying with rules of origin.

https://lawprofessors.typepad.com/antitrustprof_blog/2018/06/impact-of-free-trade-agreement-use-on-import-prices.html

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