NOT ALL GOODS ARE CREATED EQUAL: TARIFF CONCESSIONS IN THE KOREA–CHINA FREE TRADE AGREEMENT

Abstract

In this paper, we use a multinomial logit model and identify the important factors in determining the staging categories of Korean tariff concessions in the Korea–China free trade agreement (FTA). We find that most-favored-nation (MFN) tariff rates and whether a product is agricultural or not are the most influential determinants of tariff concessions in the FTA. The results also show that the effects of the determinants are heterogeneous over industries: the influence of the Chinese import share is more pronounced for agricultural products than for manufactured goods, while that of MFN tariffs is less prominent for agricultural products. The latter result implies that quite a few Korean agricultural products are heavily protected in the FTA, despite their relatively low MFN rates.