Determinants of regional trade agreement utilisation: Evidence from multiple import countries in Asia

Abstract

This study empirically examines the determinants of the utilisation of regional trade agreements (RTAs). We employ RTA utilisation data with rich country variations in 6 importing and 16 exporting countries in Asia. Then, we compute an 'RTA utilisation rate', which is defined as the share of imports under RTA regimes out of total imports of RTA-eligible products. Finally, the RTA utilisation rate is regressed at a country-pair-product level on various elements. Our major findings are as follows. Similar to existing studies, this study determines higher RTA utilisation rate when the preference margin is larger, the exporter's international competitiveness is higher, or the importer's demand is greater. Furthermore, we reveal that the RTA utilisation rate is higher when exporting products are finished products. However, it is lower when the presence of foreign-owned firms in the importing country is greater.

Trade Preference Utilization Post-Brexit: The Role of Rules of Origin

“…In the absence of firm-level information, we take the size of the flow at the product level. This is analogous to the approach taken by Nilsson (2022), in the context of the EU, and Chang et al (2022) who look at PURs between Asian countries. 10 The larger the value of trade, the larger the duty savings for a firm, thus a higher expected preference utilization.…”