Do Free Trade Agreements Affect Tariffs of Nonmember Countries? A Theoretical and Empirical Investigation

• 成果类型: Article
• 署名作者: Saggi, Kamal; Stoyanov, Andrey; Yildiz, Halis Murat
• 署名单位: Vanderbilt University; York University - Canada; Toronto Metropolitan University
• 刊物名称: AMERICAN ECONOMIC JOURNAL-APPLIED ECONOMICS
• ISSN/ISSBN: 1945-7782
• DOI: 10.1257/app.20150360
• 发表日期: 2018
• 页码: 128-170
• 关键词: POLITICAL-ECONOMY; LIBERALIZATION; Regionalism; Diversion; Mercosur; gravity; members; terms

摘要

We investigate the effects of free trade agreements (FTAs) on tariffs of nonmember countries. In our multi-country model, the formation of an FTA leads members to reduce their exports to the rest of the world. Such external trade diversion weakens the ability of nonmembers to manipulate their terms of trade vis-a-vis FTA members, a mechanism that induces them to lower their tariffs on FTA members. We empirically confirm this insight using industry-level trade data for 192 importing and 253 exporting countries, along with information on all FTAs formed in the world during 1989-2011.