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

Published online by Cambridge University Press:  28 July 2021

Jonas Kasteng ,
Ari Kokko Open the ORCID record for Ari Kokko [Opens in a new window]  and
Patrik Tingvall
Jonas Kasteng
Affiliation:
National Board of Trade Sweden, Stockholm, Sweden
Ari Kokko*
Affiliation:
Department of International Economics, Government and Business, Copenhagen Business School, Frederiksberg, Denmark
Patrik Tingvall
Affiliation:
National Board of Trade Sweden, and the European Institute of Japanese Studies at the Stockholm School of Economics, Stockholm, Sweden
*
*Corresponding author: Email: [email protected]
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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.

Keywords

F10F13F14FTAtariff preferencespreference utilizationimportstransaction-level data
Type
Research Note
Information
World Trade Review , Volume 21 , Issue 1 , February 2022 , pp. 93 - 108
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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