• Korea Trade Review
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• v.45 no.4
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• pp.1-24
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• 2020

This study aims to analyze the export effects of Korea-Canada FTA's tariff reduction, which was launched on January 1, 2015. First, as a groundwork, this study reviewed trade creation and trade diversion by investigating all possible cases of both initial FTA and additional FTA. The review was done by using the simple model of three countries assuming FTA means elimination of tariff. The review suggested that additional FTA doesn't have any negative impact on import country's social welfare contrary to initial FTA. In additional FTA, Trade diversion could happen between FTA partner countries, but it always increases import country's social welfare. In this sense, it can be called favorable trade diversion. Second, this study analyzed the export effects of Korea-Canada FTA using Clausing's product level model based on Canadian government import data from Korea which is not open to the public. It turned out that Korea-Canada FTA's tariff reduction boosted Canadian import growth rate from Korea. On the other hand, Canadian import growth rate from rest of the world was not negatively affected by Korea-Canada FTA's tariff reduction. Rather, it increased as Canadian import growth rate from Korea was higher. These findings implied trade creation rather than trade diversion of Korea-Canada FTA when it comes to Korea's export to Canada.

• Journal of Distribution Science
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• v.10 no.12
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• pp.13-17
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• 2012

Purpose - The Asia-Pacific Economic Cooperation (APEC) forum has evolved and is actively facilitating free and open trade. It is debated whether APEC has effectively reduced trade barriers in a preferential manner to encourage liberalized trade and whether increased trade between member countries has reduced trade with nonmember countries. Research designs, data, methodology -This paper empirically tests whether APEC creates or diverts trade, using an extended gravity model with tariff rates, exchange rates, and dummy variables to analyze how APEC affects intra-trade between members.The model utilizes the annual panel data between 1990 and 2007 of 16 selected APEC members and nonmembers. Results - Results reveal the changing role of APEC only between 2002 and 2007 has it created trade, fostering increased trade among trading partners and between members and nonmembers. Conclusion - APEC can be expected to demonstrate a stronger trade creating effect once its advanced and developing members complete tariff reductions by 2010 and 2020, respectively.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.72
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• pp.139-160
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• 2016

Using the gravity model, this paper analyzes empirically how the world trade in goods is affected by regional trade agreements(RTAs) which have been spreading rapidly since the mid-1990s. This paper attempt to do the panel data analysis about 174 countries during the period of 1994-2008. These panel data include 157 RTAs. It is meaningful that this paper uses comprehensive data to analyze the net effect of regional trade agreements on the global trade volume. This provides a clue as to the answer to the stumbling block debate raised early in the regional trade agreement. Also, confirming how the participation of the WTO affected the trade volume among the member countries, the WTO-related dummy variables are additionally introduced to this gravity model. And as far as we know, the state system-related variables is first considered in this model. This variable reflects the social and cultural environments of countries as the proxy variable representing the sociocultural homogeneity. In all regressions, joining to the WTO and consistency of the state system have a positive effect on increasing the trade volumes between countries. According to the analysis of RTA trade effects, RTAs, on average, increase the volume of trade within the RTA region by 27%~37%, and decrease the volume of trade between the regional and the non-regional nation by 1.2%~3.4%.Therefore, the net effect of regional trade agreements on the promotion of global welfare is positive. For robustness check, we also introduce the interaction term of the dummy variable which reflects the RTA tightening and the continuous variable which reflects the distance effect. As a result, the RTAs alleviate the trade-decreasing effect which is caused by the distance between the countries.

• Journal of Navigation and Port Research
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• v.40 no.6
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• pp.485-494
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• 2016

The primary purpose of this study is to analyze the impact and determinants of bilateral Free Trade Agreements on international total bulk shipment trade volume at the port of Korea using the Panel Gravity Model. The model estimates the aggregated panel data of exports and imports (excluding transshipment) as a dependent variable during the period from 1996 to 2015. GDP, GDP per capita, distances between bilateral countries, and FTA dummies are included as independent variables. And the economic integration of FTAs including ASEAN+3 and NAFTA3 countries were used as dummy variables. Study results show that GDP and GDP per capita have positive impacts on bulk shipment trade volume at the port of Korea. In addition, Korea's bilateral FTAs with Singapore, India and the United States have positive effects on total bulk trade volume in Korea. This is the so called trade creation effect. On the other hand, ASEAN+3 and NAFTA have negative effects on the total bulk trade. This is the so called trade diversion effect. Also, the distance between Korea and its trade partners has a negative impact. These findings provide insights for: further academic research, site operators who work in related trade and maritime sectors, and policy makers engaged in port and maritime operations. The results can be used to develop strategies for maximizing bulk port throughput.