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1 – 10 of over 1000We 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 countryās 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.
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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 nonāmember countries when tariffs…
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 nonāmember countries when tariffs of both members and nonāmembers 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 nonāmembers 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 nonāmember 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 nonāmember 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 nonāmember relative to that under MFN.
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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 firmās internal process for utilizing FTA preferential tariffs.
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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 āprotection 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 governmentās 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.
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Jung Suk Kim, Bomin Ko, Yoon Heo and Jee Hoon Lee
The purpose of this paper is to assess the current state of Koreaās internal negotiation system and the role of domestic policy factors in the process of Koreaās joining the mega…
Abstract
Purpose
The purpose of this paper is to assess the current state of Koreaās internal negotiation system and the role of domestic policy factors in the process of Koreaās joining the mega FTAs such as Trans-Pacific Partnership (TPP).
Design/methodology/approach
Along with Putnamās 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.
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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.
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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 Chinaās 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.
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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 Koreaās 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 āhalf 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.
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…
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 visionābuilding and consensusābuilding 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.
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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 Chinaās 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.
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