Who Uses the EU's Free Trade Agreements? A Transaction-Level Analysis of the EU-South Korea FTA

Jonas Kasteng, Ari Kokko*, Patrik Gustavsson Tingvall

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

The tariff preferences in FTAs do not apply automatically to all imports. Instead, importers can request to use the tariff preferences, but must then show that the imported goods fulfil the formal requirements (e.g. rules of origin) of the FTA. This is costly, which is a likely reason why tariff preferences are not always used. This research note examines preference utilization under the FTA between the EU and South Korea, which was formally ratified in 2015 (but had been provisionally applied from 2011). We use firm and transaction level data for Swedish imports from South Korea during November 2016 to answer the question ‘Who uses the EU's FTAs?’ With information on firm size, product category, import mode (direct imports or customs warehousing), preference margin, potential duty savings, and transaction size, we provide a detailed picture of when firms choose to utilize the tariff preferences. The results suggest that the differences across importers are not primarily related to firm size, as is sometimes suggested in extant literature. We also find that it is the size of the import transaction rather than the size of the preference margin that determines preference utilization.
Original languageEnglish
JournalWorld Trade Review
Number of pages16
ISSN1474-7456
DOIs
Publication statusPublished - 28 Jul 2021

Bibliographical note

Epub ahead of print. Published online: 28 July 2021

Keywords

  • F10
  • F13
  • F14
  • FTA
  • Tariff preferences
  • Preference utilization
  • Imports
  • Transaction-level data

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