We distinguish between tariff and non-tariff effects of preferential trade agreements. Non-tariff changes in CUs have a stronger trade effect than free trade agreements. The positive effect of the two-margin free trade agreement must be achieved through tariff and non-tariff changes. Tariff changes have a faster effect on the intense margin than non-tariff changes. The positive effects of CUs on both margins are mainly due to non-tariff changes. Recent literature on preferential trade agreements (ATPs) highlights the distinction between extended margins and high margins. What has been lacking is the distinction between tariff and non-tariff changes under the EPZs. Reducing tariffs is an essential feature of EPZs. But EPZ member countries often pursue deeper integration through agreements on non-tariff issues. However, some Member States may want to use non-tariff barriers to offset tariff reductions.
The current study isolates the effects of tariff and non-tariff changes under the EPZs. The aim is to establish a new set of bilateral tariffs for 90 import countries and 149 exporting countries for the period 1996-2010, covering the double-digit level of the types of products in the harmonized system. Given the complexity of non-tariff agreements, we allow for heterogeneity between three different types of ATPs, namely customs unions (CUs), free trade agreements (EAs) and partial-scope agreements (EPIs). We also take into account the heterogeneity within each of these PTAs in terms of reaction time, type of partner and type of product. The main results are: (i) non-tariff changes under the EPZs, on average, increase high trade margins and high margins; (ii) PPE has no significant effect on trade, unlike free trade agreements and free trade agreements; iii) CUs have more effect on trade than free trade agreements; (iv) the effects of CUs are mainly on non-tariff changes, while free trade agreements are the result of both tariff and non-tariff changes; (v) non-tariff changes related to CUs have a greater trade effect than changes related to free trade agreements, which in turn are more important than the PPE amendments; (vi) non-tariff changes take longer than tariff changes to affect the intense margin; (vii) non-tariff changes made under free trade and CUs agreements between developed and developing countries increase exports from the former to developing countries more than the other way around; and (viii) their response to trade liberalization is considerably heterogeneous in all sectors. Econometric Modeling: International Economics eJournal Brisbane, QLD 4072Australia-61 07 3365 9796 (Phone) 61 07 3365 7299 (Fax) Crawford School of Public Policy Australian National University Paper Series . . This work was funded by a grant from Kyung Hee University in 2016 (KHU-20161391) and the National Research Foundation of Korea Grant by the Korean government (NRF-2008-362-A00001). 145 Anam-ro, Sungbuk-guDivision of International StudiesSeoul, Seoul 02841Korea, Republic (South Korea) . International Political Economy: Trade Policy eJournal Dongdaemun-kuSeoul, Gyeonggi-Do 446-701Korea, Republic of (South Korea) Political Economy – Development: Domestic Development Strategies eJournal . Subscribe to this royalty book for other regulated articles on the subject..
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