The trade effect of regional trade agreements in the presence of duty drawbacks
Bibliographic Data
| ID | 21543763 |
|---|---|
| Authors | Kazunobu Hayakawa (0000-0003-0032-9060, Bangkok Research Center Institute of Developing Economies Pathumwan Thailand, corresponding author), Nuttawut Laksanapanyakul (0000-0002-1742-7276, Thailand Development Research Institute Wangthonglang Thailand), Hiroshi Mukunoki (0000-0002-1390-6341, Faculty of Economics Gakushuin University Mejiro Japan) |
| Year | 2024 |
| Volume | 47 |
| Issue | 9 |
| Pages | 3681-3708 |
| Publication date | 2024-09-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | World Economy (JOURNAL) |
| Journal identifiers | ISSN: 0378-5920 • E-ISSN: 1467-9701 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/twec.13605 |
| OpenAlex | W4399781588 |
| Language | EN |
| References cited | 27 |
Before regional trade agreements (RTAs) come into force, some firms enjoy duty‐free imports using other tariff regimes such as a duty drawback (DD) regime. For such firms, the use of RTA tariff regimes will not provide additional benefits in terms of duty exemption. In this study, we examine the trade effects of RTAs in the presence of a DD regime. We theoretically demonstrate that firms that switch from a DD to an RTA regime will either increase or decrease their imports. Subsequently, we empirically analyse the effect of this switching on imports using firm‐level trade data from Thailand. The empirical results show that switching firms either increase or do not change their imports. Our data also suggest that this increase in imported inputs is used to produce goods for the domestic market, not the export market. We also reveal that relatively small‐sized firms tend to switch to the RTA regime, while relatively large‐sized firms continue importing under the DD regime even after the entry of RTAs into force. With these results, we discuss the implication for the magnitude of trade creation effects of RTAs under the presence of DD regimes
Business · Duty · Economics · Free trade · International economics · International trade · Political science · Regional trade · Global Trade and Competitiveness · Global trade and economics · International Business and FDI · Law
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| Highly cited | No |
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