Network Of Free Trade Agreements Research Articles

The firm-level costs of utilizing free trade agreements

The number of free trade agreements (FTAs) has surged in recent years. In order to benefit from lower import duties, firms must apply for preferential customs treatment and comply with rules of origin requirements. This is costly and explains why preference utilization rates are typically far below 100 percent. Analyzing Switzerland’s wide FTA network based on a novel data set on all import transactions, our findings shed light on how sourcing requirements affect FTA utilization. Using a revealed preference criterion, we identify a fixed cost component of the utilization which firms avoid especially for urgent shipments. We also find limited evidence of learning effects and provide well-identified estimates of the restrictive effects of rules of origin.

Impact of Geopolitical Risk on Financial Assets: Evidence from Time-Varying Parameter Var

Geopolitical events are expected to affect all countries, asset classes, and sectors. Vietnam is a large open economy, actively participating in a vast network of free trade agreements. Therefore, political conflicts in some regions will have both positive and negative impacts on the Vietnamese economy. Aiming to explore the dependency structure between the geopolitical risk index and stock market returns, this study has evaluated quite in-depth using the TVP-VAR method combining the wavelet coherence phase between February 2012 and April 2022. The results show that geopolitical risk has a heterogeneous effect on the return of financial assets, and the market does not respond to geopolitical tensions in a uniform manner. Our research uncovers new and interesting implications for policymakers and investors involved in the Vietnamese stock market.

Impacts of the COVID-19 pandemic on international trade in developing countries: evidence from Vietnam

PurposeThe coronavirus disease (COVID-19) pandemic has been negatively affecting international trade between countries; however, there is a lack of empirical studies on developing countries such as Vietnam. This article aims to investigate how the COVID-19 cases and related deaths and policy response by Vietnam and trading partners to the pandemic affect Vietnam's export activities.Design/methodology/approachThe authors use the monthly trade data from the General Department of Vietnam Customs and employ the Poisson pseudo-maximum-likelihood (PPML) estimator to empirically investigate the effects of COVID-19 and policy response to the pandemic on Vietnam's exports at aggregate and sectoral levels over a 33-month period.FindingsIn the first year of the pandemic (January–December 2020) as well as the whole study period (January 2019–September 2021), trading partners' COVID-19 burden adversely affected Vietnam's aggregate exports, and the effect of COVID-19 deaths is significantly larger than that of COVID-19 cases. In the first year of the pandemic, estimates show a negative effect of Vietnam's COVID-19 cases on its exports, while no evidence reveals the impact of Vietnam's COVID-19 deaths. However, during the entire study period, there are remarkable adverse effects of Vietnam's COVID-19 deaths on its exports. The effect of the COVID-19 burden in Vietnam and in its trading partners differs significantly across major subsectors. In the first year, there is a positive role of government response to the pandemic by Vietnam and its trading partners in Vietnam's aggregate exports, while in the whole study period, only a positive effect of Vietnam's government response is found. Economic support and free trade agreements (FTAs) have a positive effect on Vietnam's exports. In the first year of the pandemic, Vietnam's export losses due to COVID-19 outweighed its export gains from the pandemic. However, Vietnam's exports have significantly improved over the nine months of 2021.Research limitations/implicationsEfforts should aim to reduce the number of COVID-19 deaths rather than focus on reducing the number of COVID-19 cases. The application of stringency measures by both exporters and importers should be minimized, or at least those measures need to be combined with health methods, such as testing policy and contact tracing, short-term investment in healthcare and especially investments in vaccines. In addition, economic support, particularly debt relief, needs to be widely applied to assist firms, especially those involved in international trade. The expansion of FTA networks and diversifying export destinations may be helpful in maintaining production networks and export activities.Practical implicationsIn the long-term period, the application of stringency measures by both exporters and importers should be minimized, or at least those measures need to be combined with health methods such as testing policy and contact tracing, short-term investment in healthcare and especially investments in vaccines. In addition, economic assistance, particularly debt relief, needs to be widely applied to assist firms, especially those involved in international trade activities.Originality/valueTo the best of the authors’ knowledge, the paper is among the first studies empirically investigating the impacts of COVID-19 and policy response to the pandemic on aggregate and sectoral exports from Vietnam. The paper also measures the absolute value of export gain and export loss due to the pandemic between Vietnam and trading countries.

South Korea’s trade policy imperatives: the impact of COVID-19 pandemic

The article analyses the goals and imperatives of the Republic of Korea’s trade policy before the COVID-19 pandemic and taking into account its consequences. The RoK's trade policy aims to synchronize the interests of the state, conglomerates and small and medium-sized enterprises. For this purpose, a system of division of powers in the field of trade policy and diplomacy has been designed, which has proven to be very effective. The COVID-19 situation, which has exacerbated the growing trend of protectionism in international trade, highlighted the chronic structural problems of trade in the Republic of Korea of trade in the area of geographical and commodity structure – despite the positive dynamics of the country's exports. The challenge of countering protectionism, coupled with the need to diversify the commodity and geographic structure of exports, implies two areas of work: strengthening an industrial structure capable of producing competitive goods and expanding the network of free trade agreements. The need to address logistical problems, digitalization, and the trend towards decarbonization forces Korea to rely more heavily on the idea of promoting free trade. The country's leadership continues to criticize protectionism, guided by the idea of a balanced use of bilateral and multilateral instruments of liberalization.

Особенности стратегии ЕАЭС по формированию сети ЗСТ

The number of free trade agreements (FTA) in international trade is rapidly growingand it makes them the main tool for countries’ trade liberalization. Created in the 2015, the Eurasian economic union (EAEU), that has the competence of the customs union, also started actively building a network of FTAs. To date, four such preferential agreements and one non-preferential trade agreement are in force, and at least three other agreements are expected to be signed in 2021-2025.Some specific features can be attributed to the emerging network that will impact the economic development of the EAEU Member States and will allow its partners to adapt their foreign trade policies accordingly. The geography of the EAEU agreements demonstrates the intention to create a wide network of FTA covering primarily the Eastern hemisphere, with the potential to extend it to all major regions. The EAEU partners are generally small States and notthe strongest economies, and the content of FTA agreements is not yet as broad and deep as, for example, concluded by the EU. It is noteworthy that the system almost does not contain WTO-extra provisions. However, the EAEU is only at the beginning of building an FTA network that may change the EAEU position in the international trade system.The main goal of the article is to track the distinct features of this new EAEU trade policy and to identify specifics and prospects for the emerging FTA network, based on the already concluded agreements and the coming ones.

Chinese Trade Bilateralism and Latin America: The Case of China-Chile Free Trade Agreement

In 2001 China’s entrance to the World Trade Organization represented a major threat to developing countries including those from Asia and Latin America and the Caribbean. Countries such as Mexico were worried about its inclusion for China’s competitiveness was a great challenge to face; others such as Chile took advantage of the benefits of being part of the multilateral forum and began negotiations to formalize bilateral cooperation. What are the main characteristics of bilateralism? What benefits can China bring as a trading partner within the framework of an FTA? Can the Chilean case be taken into consideration for other countries to pursue bilateral agreements with China? This paper has the objective of answering those questions through an analysis of the scope of trade agreements, the Chinese integration to the World Trade Organization and its free trade agreements network, and the integration of China with Latin America, with a special focus on its relationship with Chile as the first country in the continent to have an agreement with China.

Do self-organization and relational embeddedness influence free trade agreements network formation? Evidence from an exponential random graph model

The rapid development of free trade agreements (FTAs) has made FTA networks an important aspect of the global economic ecosystem and governance system. This study analyzes the network properties and its evolutionary process using data for 193 economies from 1965 to 2018 and applies the Exponential Random Graph Model (ERGM) and temporal Exponential Random Graph Model (TERGM) to made empirical tests. The work aims to clarify the effect of self-organization and relational embeddedness on FTA network formation and evolution. Our findings several conclusions: (I) The FTA networks tend to cluster with a growing density by self-organization – a FTA’s partners are more likely to be partners. (II) The formation and evolution of the FTA networks exhibits degree centrality and population Matthew effect. Economies with more FTA partners or population are more likely to sign FTAs with others. (III) Economies show obvious economic homogeneity and population heterogeneity in choosing FTA partners. (IV) The formation and evolution of FTA networks is significantly embedded in the international trade network, historical colonial network, and geographic contiguity network.

Tariffs and formation of free trade agreements networks

AbstractThis paper examines the formation of bilateral free trade agreements (FTAs) on the basis of country heterogeneity in the tariff level. We demonstrate that a country's unilateral incentive to form an FTA depends on the relative magnitudes of the (negative) market concession effect and the (positive) market expansion effect, both of which are determined by the tariff levels of the two FTA partner countries. Global welfare is maximised when all country pairs form FTAs. Two countries in equilibrium are more likely to form an FTA when their tariff gap is smaller or when their tariff levels are neither very high nor very low. This finding is robust to several extensions of the model. Our preliminary empirical analysis provides some evidence for the finding.

Free trade agreements in a small, open country: The case of Norway

AbstractNegotiating free trade agreements (FTAs) has been a high political priority for Norway. Today, it has agreements with 41 countries outside the European Union (EU)/the European Free Trade Association (EFTA), resulting in one of the world's most extensive FTA networks. FTAs cover about 10% of Norway's trade—a share likely to increase in the future. These agreements eliminate tariffs on a substantial number of traded products and have gradually become more comprehensive, covering an expanding range of non‐tariff areas. Hence, they may have trade‐promoting effects beyond tariff reductions as such. On the other hand, the non‐tariff provisions often do not go further than what has already been dealt with in other international agreements or practised domestically, so their overall effect may be limited.

Swiss Foreign Economic Policy: Key Challenges with a Focus on US Trade Protectionist Measures

Switzerland needs to be highly competitive and to have a very good access to foreign markets in order to remain attractive for investors. Over the past decades, Swiss foreign economic policy has put a major emphasis on the multilateral level —GATT, WTO—. With the European Union, a very close integration has been achieved. Besides, a broad network of free trade agreements has been established around the world. Nowadays, strong headwinds threaten the status quo and new liberalization steps face complex issues. In addition, US protectionism under President Trump’s America First policy has an increasingly negative impact on the world economy. US actions further deploy growing collateral effects for Swiss firms as the EU and other partner states take precautionary measures and retaliate.

El fortalecimiento de la facilitación comercial en México a partir del Tratado Integral y Progresista de Asociación Transpacífico

An extensive signing of free trade agreements network, the adoption of programs to promote foreign trade and the high competition in international markets have emerged as distinctive features of the trade liberalization undertaken by Mexico since thirty years ago. However, these opening has been slow in terms of market diversification and trade facilitation. Thus, the present work consists in analyzing the Mexico Enabling Trade Index´s vis-a-vis to the economies belonging to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and evaluate their institutions, infrastructure, and services, to simplify the free flow of goods. The objective is detected opportunity areas for policies strategic adoption to strength the trade facilitation, using comparative method and Pearson's correlation.

Overlapping free trade agreements and international trade: A network approach

AbstractIn our work, we have analysed the effect of the hub‐and‐spoke nature of free trade agreements (FTAs) on trade. Contrary to previous analyses, we have considered the effects of the country's position in the FTA network on the bilateral trade of the hub country. We have conducted an in‐depth analysis of the global network of FTAs, focusing particularly on its evolution in the last 15 years. We have utilised a panel data set covering the period 1960–2010 to investigate the effects of the hub‐and‐spoke on trade. Our results show that the countries that are more connected to FTAs export more than those that are less involved, although not all the partner countries you can connect with are the same. An increase in the number of spokes that have no link between them has, on average, a negative effect on the trade of the hub, which indicates that signing FTAs with every country is not the optimal strategy for increasing trade. However, if we consider the way new FTAs change the relative position of a country, we can see that if new FTAs make the country more central or less constrained in the network, these new agreements have a strongly positive and significant pro‐trade effect.

섬유/의류 산업의 FTA 대응전략 (한-미, 한-중 FTA를 중심으로)

There is an expanding global network of free trade agreements (FTA). High-quality, comprehensive free trade agreements play an important role to support global trade liberalization and are explicitly allowed under the World Trade Organization (WTO) rules. An FTA is an international treaty that removes barriers to trade and facilitates stronger trade and commercial ties that contribute to increased economic integration between participating countries. Korea benefits from the global FTA trend; however it has started and developed FTA negotiations later than other countries. Current FTA agreements exist with Chile, Singapore, EFTA, ASIAN, India, EU, Peru, USA, Turkey, Australia, and Canada; in addition, there are ongoing negotiations with China, Colombia, New Zealand, and Vietnam. FTA open up opportunities for the textile/clothing industry to expand businesses into key overseas markets. FTA improve market access across all areas of trade to help maintain and stimulate the competitiveness of textile/clothing firms. This study examines the expansion of free trade agreements in light of changes in the international trade environment and the status of the Korean textile/clothing industry. Korea's textile/clothing export/import products and concession of tariff, country of origin covered under Korea-US/China FTA are investigated to identify problems. This study provides practical and policy implications for the textile/clothing industry in regards to the Korea-US/China FTA.

The Abe Effect on South Korea’s Trade Policy

Prime Minister Shinzo's decision to enter talks on the Trans- Pacific Partnership (TPP) has been a game changer in the competition over Asia Pacific free trade agreements (FTAs). His move helped to create a space for multilateral, mega-FTA competition before South Korea could fully prepare and implement its FTA predicated on bilateral deals. In this article, I provide an overview of South Korea's evolving strategies toward FTAs and explore how it has responded to the Abe effect. My focus is on two challenges for South Korea in participating in the TPP: US geopolitical pressure once Japan entered negotiations, and the de facto FTA negotiations with Japan under the TPP. Dealing with Japan is an especially tall order given the troubled history of South Korea-Japan economic and political relations. KEYWORDS: Korea-Japan relations, TPP, Shinzo, strategy, security-economy nexus.WHEN ABE SHINZO RETURNED TO POWER IN DECEMBER 2012, FEW people expected that Japan-South Korea relations would hit their lowest mark since diplomatic relations between them were restored in 1965. Instead of celebrating joint accomplishments of the past five decades, the two sides attempted to improve their severely strained relations, which included failure to hold a oneon- one summit meeting since took office. History conflicts emanating from Abe's historical revisionism in regard to imperialism and colonialism have been the primary source of political strains. While South Korea's president Park Geun-hye has demanded a more explicit apology from Japan on the history issues, such as the Imperial Army's enslavement of so-called comfort women, in Japan a view is gaining strength that it has apologized enough. Increasing enmity is reflected in public opinion surveys, such as one by the East Asia Institute and Genron NPO in spring 2014. It found that nearly 70 percent of South Koreans have a negative image of Japan, while 66 percent of Japanese have an unfavorable image of Korea (East Asia Institute 2014). This trend will most likely continue throughout 2015 because, as John Delury's article in this volume argues, the odds of genuine reconciliation between and Park are very low.Abe's return to power has also made an economic impact. The best example is his decision to enter TPP (Trans-Pacific Partnership) negotiations on March 15, 2013, significantly affecting South Korea's trade strategy that sought middle-power leadership as a of regional and transregional free trade agreement (FTA) networks. Abe's decision means that Japan supports the TPP, the US initiative in regional trade architecture, and helps to enhance the TPP's credibility and viability as a mega-regional trade agreement within the US coalition-building strategy (Terada 2013). Abe's move prompted China's response to accelerate the pace of devising alternative FTA networks. And it created strategic dilemmas for South Korea. Because the United States, together with Japan, has taken the initiative in forging regional trade networks through the TPP while China is counterbalancing it, the FTA game is now about creating (or multilateralizing) a regional or megaregional FTA. This is a blow to South Korea's FTA hub strategy predicated on bilateral FTAs with the major economies.My article explores how South Korea has responded to the challenges caused by the major economic powers. After providing an overview of South Korea's evolving strategies toward FTAs as an FTA latecomer, I examine the country's policy toward the TPP. I then analyze the Abe effect on South Korea's global strategy. The new dilemmas facing South Korea on TPP participation are twofold. It felt strong US geopolitical pressure once Japan entered the negotiations. But should South Korea enter the FTA negotiations, it would have to deal with a difficult Japan.The Rise of South Korea in the FTA GameFTAs and the Hub Strategy in East AsiaEast Asian countries embarked on FTA initiatives in response to economic globalization, the Asian financial crisis, and competitive regionalism. …

Free Trade Networks on Non-tariff Barriers

In this paper, we examine the formation of free trade agreements on eliminating non-tariff barriers as a network formation game. A firm faces an import volume quota in a foreign country, which it cannot exceed but can be removed through bilateral free trade agreements. We focus on the stable free trade agreements networks, considering the case where each country determines the quotas of the foreign firms. We show that global free trade may not be achieved in any stable network. Moreover, all countries may be autarkic in a stable network. Finally, we demonstrate that our main results continue to hold regardless of the type of non-tariff barriers, such as import licences, import share quotas, and technical measures for increasing the production costs of foreign firms.

Diffusing EU Law beyond the Borders of the Union: The Judicialization of the European Trading Area

The European Union (EU) lies at the heart of a network of free trade agreements (FTAs), negotiated with partner countries in Europe and beyond. Within such a context, this paper focuses on the extent to which the judicialization of trade policy in the Union and its diffusion externally have impacted on states which are members of the European Free Trade Association (EFTA), reflecting the process of Europeanization as a manifestation of the Union external governance.

Dynamic Free Trade Networks: Some Numerical Results

AbstractTo help predict whether the proliferation of free trade agreements (FTAs) continues until global free trade is effectively attained, this paper investigates dynamic paths of FTAs, generated by numerical simulations of a model of an FTA network formation game with many countries. The characteristics of the final FTA network naturally depend on how the proposer of an FTA is chosen in each period. The paper finds that if the country that has the largest incentive to form an FTA is chosen as a proposer in each period, the network evolution always leads to a unique final FTA network, which may or may not be the complete network of FTAs. FTA networks often evolve to a partition of the world into a small number of groups of asymmetric size owing to the negative network externality caused by preference erosion.

The impact of Korea's FTA network on seaborne logistics

Few studies have examined Free Trade Agreements (FTAs) in the context of logistics, reflecting a lack of hybrid studies involving trade economists and logistics researchers. This paper attempts to examine the impact of Korea's FTAs on the flow of international trade, the volume of seaborne trade, and the creation of additional demand for logistics services for port and containerized cargoes. The implementation of Korea's FTAs is expected to increase port and containerized cargoes, an additional 90 million tons and an additional 893 095 TEUs in the long run. Although the demand for seaborne logistics is expected to increase, the impacts are likely to vary widely across sectors and FTAs. Increased imports of agricultural and chemical/rubber/plastic products are likely to be the most important contributor to the creation of additional demand for seaborne logistics. This paper tries to draw implications for the logistics industry and the port authority.

European Markets as Challenges or Opportunities for Mexican SMEs' Internationalization: A Critical Analysis of Globalization

This chapter contributes to the understanding of the effects of globalization on the internationalization of Small and medium-sized enterprises (SMEs) from developing countries, trading with developed countries. It is based on a case study of BANCOMEXT (the Mexican Trade Commission) in Europe. The chapter addresses the problems and opportunities faced by Mexican SMEs in European markets. It suggests that, despite Mexico 's economic liberalization and the network of Free Trade Agreements (FTAs) all over the world, Mexican SMEs have few opportunities for internationalising in markets as distant and developed as the European Union .The chapter pays attention to the relation between globalization and growth to shed light on the impact of globalization. Analyzing Mexican international trade, the transformation and results due to trade liberalization have been particularly notable in terms of export diversification (Carrillo- Rivera 2007) and FDI attraction. Keywords:BANCOMEXT; European markets; Free Trade Agreements (FTAs); globalization; internationalization; Mexican SMEs; trade liberalization

Japan's New Foreign Economic Policy: A Shift Toward a Strategic and Activist Model?*

This article analyzes key departures in Japanese foreign economic policy: the development of an extensive network of free trade agreements thereby abandoning the exclusive focus on the multilateral system as the vehicle for trade liberalization, and the revamping of the official development assistance (ODA) program by slashing its budget, emphasizing national interests in aid giving, and phasing out yen loans to China. We argue that the remarkable degree of policy activism in both trade and ODA represents the Japanese government's attempt to respond strategically to common challenges: domestically the economic recession, internationally the pressure for policy convergence and competition with China. However, in both issue areas the ability of the government to embark on swift policy changes has been compromised by domestic politics: opposition from vested interests and politicization of policy‐making, bureaucratic sectionalism, and weak executive leadership. We conclude with some policy recommendations to improve the coherence of foreign economic policy formulation in Japan.