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Open Access
Article
Publication date: 31 August 2013

Koo Woong Park

We study here the effects of FTA on demand, consumer surplus, dealer profit, and tariff revenue depending on the degree of substitution between two goods and import competition…

Abstract

We study here the effects of FTA on demand, consumer surplus, dealer profit, and tariff revenue depending on the degree of substitution between two goods and import competition structure in a two countryā€™s static model. We consider monopolist dealer, and perfect competition in imports market. The base model is with a positive tariff and we compare the equilibrium with a zero tariff under FTA. The rankings in the consumer utility are such that it is i) the highest under perfect competition with FTA or without FTA, ii) second highest under monopoly with FTA, and iii) the lowest under monopoly without FTA.

Details

Journal of International Logistics and Trade, vol. 11 no. 2
Type: Research Article
ISSN: 1738-2122

Keywords

Article
Publication date: 17 April 2009

Kamal Saggi and Halis Murat Yildiz

The purpose of this paper is to evaluate and contrast the welfare effects of free trade agreements (FTAs) and customs unions (CUs) on member and nonā€member countries when tariffs…

1002

Abstract

Purpose

The purpose of this paper is to evaluate and contrast the welfare effects of free trade agreements (FTAs) and customs unions (CUs) on member and nonā€member countries when tariffs of both members and nonā€members are endogenously determined. It also aims to provide sufficient conditions under which both types of preferential trade agreement (PTA) are likely to lower tariffs on nonā€members relative to that under most favored nation (MFN).

Design/methodology/approach

The paper employs a three country Cournot oligopoly model of trade with segmented markets.

Findings

It is shown that under symmetry CU members enjoy higher welfare relative to that under an FTA or MFN. Furthermore, the nonā€member country gains from the formation of a PTA so long as the PTA's external tariff falls below a certain threshold. However, for FTA members to necessarily gain, their external tariff needs to be greater than this threshold but smaller than twice their MFN tariffs. Outside this tariff range, welfare effects of FTAs are ambiguous in the absence of further assumptions. The paper also isolates sufficient conditions under which a PTA member is less likely to impose a positive tariff on the nonā€member relative to that under MFN.

Originality/value

Unlike existing literature, we do no assume demand linearity to obtain our main welfare results and use this assumption only for illustrative purposes. Another contribution of the paper is to provide sufficient conditions under which a PTA member is less likely to impose a positive tariff on the nonā€member relative to that under MFN.

Details

Indian Growth and Development Review, vol. 2 no. 1
Type: Research Article
ISSN: 1753-8254

Keywords

Open Access
Article
Publication date: 31 March 2019

Joon-Heon Song and Hee-Cheol Moon

Considering the proliferation of free trade agreements (FTAs) worldwide, this study develops and empirically tests a conceptual model to explain the impact of CEO attitudes on the…

Abstract

Considering the proliferation of free trade agreements (FTAs) worldwide, this study develops and empirically tests a conceptual model to explain the impact of CEO attitudes on the intention of exporting firms to utilize FTA preferential tariffs. Based on a survey of 221 exporting small and medium-sized enterprises in South Korea, this study employed partial least squares structural equation modelling to test the hypotheses. Results show that perceived usefulness and organizational learning partially mediate the relationship between CEO attitudes and intention to use FTA schemes. This study deepens our understanding on the firmā€™s internal process for utilizing FTA preferential tariffs.

Details

Journal of International Logistics and Trade, vol. 17 no. 1
Type: Research Article
ISSN: 1738-2122

Keywords

Article
Publication date: 27 May 2014

ZhenHua Gu and Yao Shen

Will a free trade agreement (FTA) between nations be politically viable? Under political lobbying, which incentives determine whether FTAs will be signed or not? Will FTAs…

Abstract

Purpose

Will a free trade agreement (FTA) between nations be politically viable? Under political lobbying, which incentives determine whether FTAs will be signed or not? Will FTAs steadily include more countries until we reach a worldwide free trade? The paper addresses these questions using a theoretical analysis model, with ā€œprotection for saleā€ model as the foundation.

Design/methodology/approach

Firstly, the economic and political factors are investigated in the theoretical model. Then, the validity of results is tested by econometric analysis with a panel probit model. The data spans 25 key trade nations and covers the period of 2007, 2010 and 2013.

Findings

First, the FTA will be endorsed only if the aggregate welfare under FTA, combing lobby contributions with social welfare of both pair nations, is higher than the counterpart without FTA. Otherwise, FTA is rejected. Second, the possibility of concluding a FTA has positive correlation with pair nationsā€™ market sizes and the number of countries with which they have both previously concluded FTAs; the possibility has negative correlation with the distance between pair nations; if pair nationsā€™ aggregate market sizes are large enough, the possibility has positive correlation with governmentā€™s sensitivity to social welfare, otherwise the correlation is negative. Third, although FTAs are characterized by the regionalism, they will contribute to multilateral free trade in the long run.

Originality/value

Most researchers do not take the foreign lobbying into account in the manner or the detail that we do here when they study the determinants of FTAs. This paper shows the condition under which FTA is politically viable and incentives behind FTA.

Details

Journal of Chinese Economic and Foreign Trade Studies, vol. 7 no. 2
Type: Research Article
ISSN: 1754-4408

Keywords

Article
Publication date: 6 June 2016

Jung Suk Kim, Bomin Ko, Yoon Heo and Jee Hoon Lee

The purpose of this paper is to assess the current state of Koreaā€™s internal negotiation system and the role of domestic policy factors in the process of Koreaā€™s joining the mega…

Abstract

Purpose

The purpose of this paper is to assess the current state of Koreaā€™s internal negotiation system and the role of domestic policy factors in the process of Koreaā€™s joining the mega FTAs such as Trans-Pacific Partnership (TPP).

Design/methodology/approach

Along with Putnamā€™s three determinants of win-set size, the authors analyze a new set of policy factors ā€“ including Trade Adjustment Assistance (TAA), the FTA Domestic Planning Division, and the Trade Procedure Act ā€“ to examine the institutional arrangements available for the ratification of the TPP in Korea.

Findings

To minimize the social cost of the internal negotiation process of the trade, better understanding of the role of domestic policy factors is essential. The paper proposes some important policy suggestions which will scale up the benefit of the trade.

Research limitations/implications

The very same analysis can be easily extended to examine the domestic reactions for future FTA negotiation, especially for Mega FTA negotiation.

Practical implications

The authors propose six policy suggestions: a Master Process Manual; measures to diagnose domestic reactions; emphasizing non-economic issues; strengthening human resources; considering the strategic role of the Trade Procedure Act; and reshaping TAA, to ensure that a tranquil environment exists for domestic negotiation and confirmation and the authors believe these policies can be implemented widely in trade negotiations.

Originality/value

This paper contributes to the existing literature in at least three respects. First, the authors made the first attempt to integrate the domestic policy tools with the domestic determinants of trade negotiation outcomes. Second, the policy proposals can be extended to other countriesā€™ cases with a minor adjustment. Finally, the analysis is based on the assumption that international trade negotiations are multi-level frameworks where domestic influences play a vital role in the aftermath of bilateral FTAs.

Details

Journal of Korea Trade, vol. 20 no. 2
Type: Research Article
ISSN: 1229-828X

Keywords

Open Access
Article
Publication date: 31 August 2015

Won-Mog Choi

The Korea-China-Japan Investment Promotion, Facilitation and Protection Agreement is the first treaty in the economic field that binds the three Northeast Asian countries together…

Abstract

The Korea-China-Japan Investment Promotion, Facilitation and Protection Agreement is the first treaty in the economic field that binds the three Northeast Asian countries together under a single legal instrument. The existence of effective dispute-settlement procedures under the treaty will contribute to the creation of a favourable investment climate in the host country. Nevertheless, there have been fears about frivolous or vexatious claims that could inhibit legitimate regulatory actions by governments. How to compose an investment chapter of the Korea-China-Japan FTA that is being negotiated is a pressing demand for all in the region. Any pertinent answers to such a quest require a thorough comparison of the benefits and drawbacks of any development of relevant rules and governance. In the end, a quest for better international investment governance in Northeast Asia in the future requires sound evaluation of lessons from the past and present.

Open Access
Article
Publication date: 31 December 2013

Jung-O Ko and Jung-ran Cho

Korea and China have promoted a bilateral FTA since 2005 to upgrade their economic relationships. If the Korea-China FTA is concluded, then trade between the two countries is…

Abstract

Korea and China have promoted a bilateral FTA since 2005 to upgrade their economic relationships. If the Korea-China FTA is concluded, then trade between the two countries is likely to involve substantial changes both quantitatively and qualitatively. Offer lists submitted by Korea include steel, petrochemicals and machinery and those by China include some agricultural and marine products as well as nonferrous metals. Korea's interest in the Korea-China FTA has focused mainly on damage to the agricultural sector and there have been a lot of studies on the effects of the FTA on Korean agricultural sector. However, little is known about why China includes the nonferrous metals industry for early voluntary liberalization and its implications for the domestic economy. Nonferrous metals industry is one of Chinaā€™s national strategic sectors and has a large supply excess in the country. This study targets the survey of Chinese nonferrous metals industry and trade structure and considers the problem of nonferrous metals in the context of negotiations for the Korea-China FTA and its implications for a higher-quality Korea-China FTA.

Details

Journal of International Logistics and Trade, vol. 11 no. 3
Type: Research Article
ISSN: 1738-2122

Keywords

Article
Publication date: 1 March 2010

Junsok Yang

The government procurement market is one of the few markets where substantial trade barriers still exist. Many countries, including Korea, have been trying to reduce these market…

Abstract

The government procurement market is one of the few markets where substantial trade barriers still exist. Many countries, including Korea, have been trying to reduce these market barriers through the World trade Organization (WTO) plurilateral government procurement agreement (GPA) and foreign trade agreement (FTA) negotiations. The actual results have been somewhat disappointing. This paper argues that one factor behind the disappointing results may be Koreaā€™s negotiating text, heavily influenced by the GPA, that includes several provisions which may hinder efficiency and add to procurement costs. The paper offers a policy option for Korean FTA negotiators - a ā€œhalf trackā€ approach where Korea can offer mutual national treatment to the suppliers of the FTA partner with no (or very little) additional procedural or transparency requirements such as those associated with the GPA -type provisions.

Details

Journal of Public Procurement, vol. 10 no. 3
Type: Research Article
ISSN: 1535-0118

Article
Publication date: 20 July 2012

Vicente Carabias, Peter De Smedt and Thomas Teichler

This Guest Editorial aims to demonstrate the diversity of application fields in which FTA methods are being used and to offer a glimpse into possible consequences that grand

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Abstract

Purpose

This Guest Editorial aims to demonstrate the diversity of application fields in which FTA methods are being used and to offer a glimpse into possible consequences that grand challenges may imply for the development of FTA.

Design/methodology/approach

This introductory paper provides an overview of selected FTA 2011 Conference contributions for this Special Issue.

Findings

FTA approaches create spaces where an effective dialogue between key players in different policy domains facilitates visionā€building and consensusā€building for engineering major processes of transformation. Therefore, sound approaches of futures thinking will help to better address the grand challenges.

Research limitations/implications

From a large set of excellent papers presented at the FTA 2011 Conference, only a restricted number of papers could be included in this Special Issue highlighting the broad diversity of FTA application fields in response to grand challenges.

Practical implications

FTA can contribute not only to the steering of diverse innovation systems, but also to their adjustment, adaptability and ability to shape responses to grand challenges.

Social implications

The papers of this Special Issue point to the need for FTA to take into account user perspectives and to shape the social context.

Originality/value

This Special Issue brings together papers that explore not only the opportunities and limitations of implementing FTA methods in a variety of policy domains, but also their benefits in enabling a better understanding of complex systems that interact in each situation and in defining effective policy responses.

Details

Foresight, vol. 14 no. 4
Type: Research Article
ISSN: 1463-6689

Keywords

Open Access
Article
Publication date: 30 January 2005

Inkyo Cheong

Since the financial crisis, East Asian countries have worked on bilateral/regional Free Trade Agreements (FTAs). Currently, East Asian countries are working on over 30 FTAs. So…

Abstract

Since the financial crisis, East Asian countries have worked on bilateral/regional Free Trade Agreements (FTAs). Currently, East Asian countries are working on over 30 FTAs. So far, the United States (U.S.) has exerted its considerable political and economic power in East Asia, but its political and diplomatic position is increasingly shaky for many reasons-emergence of Chinaā€™s economic and military strength, growing regionalism in East Asia, weakening influence of the Asia Pacific Economic Conference (APEC) forum, and growing anti-American sentiment after the anti-terrorism war. The U.S. will be even more concerned about the development of FTAs in East Asia, since the country will suffer economic and non-economic losses when the East Asian regionalism is developed. This article evaluates a U.S.-Korea FTA in terms of U.S. involvement in East Asian regionalism, and tries to provide an economic assessment of the FTA. This article points out that the U.S. should take advantage of the U.S.-Korea FTA to secure its interests in East Asia and to avoid exclusion from East Asian regional economic integration.

Details

Journal of International Logistics and Trade, vol. 3 no. 1
Type: Research Article
ISSN: 1738-2122

Keywords

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