Trade Creation Effects of Regional Trade Agreements: Tariff Reduction versus Non-tariff Barrier Removal

Kazunobu Hayakawa, Tadashi Ito, Fukunari Kimura

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

This study uses the most disaggregated tariff line-level trade data in a large number of countries in the world to empirically decompose the trade creation effects of regional trade agreements (RTAs) into those owing to tariff reduction and those owing to non-tariff barrier (NTB) removal. Specifically, utilizing our detailed dataset, we employ the standard gravity equation and identify those effects by estimating the trade creation effects of RTAs for ineligible and eligible products for RTA preferential schemes separately. Our major findings are as follows. First, for the whole sample, there are significantly positive trade creation effects owing to tariff reduction while the effects for NTB removal are weak. Second, the trade creation effects of tariff reduction and NTB removal are substantially large in the case of trade among low-income countries but weak among high-income countries.

Original languageEnglish
Pages (from-to)317-326
Number of pages10
JournalReview of Development Economics
Volume20
Issue number1
DOIs
Publication statusPublished - 2016 Feb 1

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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