Impacts of common rules of origin on FTA utilization

Abstract

This paper examines empirically the impacts of sharing rules of origin (RoOs) with other ASEAN+1 free trade agreements (FTAs) on ASEAN-Korea FTA/ASEAN-China FTA utilization in Thai exports in 2011. Our careful empirical analysis suggests that the harmonization of RoOs across FTAs play some role in reducing the costs yielded through the spaghetti bowl phenomenon. In particular, the harmonization to "change-in-tariff classification (CTC) or real value-added content (RVC)" will play a relatively positive role in not seriously discouraging firms' use of multiple FTA schemes. On the other hand, the harmonization to CTC or CTC&RVC hinders firms from using those schemes. The Institute of Developing Economies (IDE) is a semigovernmental, nonpartisan, nonprofit research institute, founded in 1958. The Institute merged with the Japan External Trade Organization (JETRO) on July 1, 1998. The Institute conducts basic and comprehensive studies on economic and related affairs in all developing countries and regions, including Asia, the

Impact of FTA on Trade in ASEAN and Australia Using Customs Level Data

“…We use average tariff rates, as tariff schedules are aggregated from the HS-10 level to the HS-6 level to match the customs clearance data (a summary of the average applied tariff rates on imports from ASEAN to Australia is provided in the Annex). Hayakawa and Laksanapanyakul (2017) find that the decision to aggregate preference margins based on minimums, maximums, or means has little effect on research outcomes.…”

“…Based on similar customs data, studies find a positive impact of FTA utilization on Korean imports from ASEAN under the ASEAN-Korea FTA (Hayakawa et al, 2013a(Hayakawa et al, , 2014 and on Thailand's imports under its FTAs (Hayakawa & Laksanapanyakul, 2017). Recent studies by Ando and Urata (2018) and Hayakawa and Shiino (2021) highlight the positive impact of FTAs on imports for Japanese FTAs.…”

“…Pomfret et al (2010) and Keck and Lendle (2012) find that the ROO effect is significantly negative depending on the exact type of measurement and analysis (i.e., an ROO index versus a dummy variable approach). Hayakawa and Laksanapanyakul (2017) further expand upon this idea, finding that the harmonization of ROOs across different FTAs helps to reduce costs, thereby increasing utilization rates.…”

Rules of origin and trade preference utilization among least developed countries

“…This article contributes to the small, but growing, literature on the impact of rules of origin on trade. For example, several studies use cross‐sectional data to analyze how utilization rates differ across trade agreements (Cadot et al, 2006; Hakobyan, 2015; Hayakawa & Laksanapanyakul, 2017). Other studies find that utilization rates grow as the difference between preferential and non‐preferential tariff rates grow (Francois et al, 2005; Keck & Lendle, 2012; Manchin, 2006).…”

An ex-post analysis of trade effects of the ASEAN–Korea Free Trade Area (AKFTA) from Korea’s Perspective

“…Hayakawa et al (2014) suggested that the restrictive ROOs should be relaxed to create more trade flows between members of the AKFTA. Similarly, Hayakawa and Laksanapanyakul (2017) conducted a rigorous econometric estimation analysis to investigate the impact of ROOs in ASEAN+1 FTAs including the AKFTA, and strongly recommended harmonizing the ROOs across the ASEAN+1 FTAs.…”