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자유무역협정의 구성요소가 교역에 미치는 영향 분석 표지
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Title The Contents of Free Trade Agreements and Their Effects on Trade
Author Moonhee Cho, Young Gui Kim, Kyong Hyun Koo, Hyeri Park, and Hyeyoon Keum
Series Policy Analyses 18-24
Language Korean
Date 2018-12-31

   Recently, the global trade system is deteriorating and the basis for world free trade is being threatened by a rise in trade protectionism. The multilateral trade system represented by the WTO has shown its limitations in efficiently reflecting the rapidly changing global trade environment. In the meantime, free trade agreements have continued to increase up to recently, not only in terms of their numbers but also the scope they cover. While free trade agrements in the past focused on tariff reduction, more recent free trade agrements include complex provisions on issues such as non-tariff barriers, services, investment, digital trade, and intellectual property rights. This study reviews the contents of free trade agreements and investigates their effects on trade using data from Worldbank (2017). First, more recent free trade agreements appear to contain more contents or provisions. We also find that Korea tends to sign more comprehensive free trade agreements, containing an average of 26 provisions, which is higher than the world average of 18. Second, we find that establishing such comprehensive free trade agreements has greater positive effects on trade. In particular, free trade agreements including more WTO-X provisions promote trade flows more effectively. Third, we also investigate the effect of each type of provision on trade. Empirical results are as follow. Market access provisions increased trade significantly. However, service provisions appear to have a negative effect on trade. Investment provisions also have a negative effect on trade, mainly negative for export from advanced countries to both advanced and developing countries. We also find that intellectual property rights provisions play a restrictive role on trade between developing countries while public procurement provisions have a positive effect on export to developing countries. Finally, while standard provisions have a negative effect on exports from developing countries to advanced countries, they appear to promote trade between developing countries. As mentioned above, the effects of provisions on trade are heterogeneous by the level of a country’s economy. Moreover, these might vary depending on how they are implemented, so further research is needed for an accurate interpretation of the results. 

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