Working Paper: NBER ID: w29319
Authors: Kala Krishna; Carlos Salamanca; Yuta Suzuki; Christian Volpe Martincus
Abstract: Preferential trade areas (PTAs) allow firms to pay zero or preferential tariffs as long as Rules of Origin (ROOs) are met. Meeting them is costly for exporters not only in terms of production costs but also in terms of fixed costs, such as documentation costs. We ask if these fixed costs change with the experience of exporters in obtaining preferential tariffs. We explore this using a unique exporter-importer matched transaction-level customs data set on a group of Latin American countries. We estimate a model-based equation and show that these fixed costs depend on the history of preference utilization.
Keywords: Preferential Trade Areas; Rules of Origin; Fixed Costs; Experience; Preference Utilization
JEL Codes: F02; F13; F14; F68; N76
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| experience (Y60) | fixed costs (D24) |
| fixed costs (D24) | probability of using preferences (C25) |
| experience (Y60) | probability of using preferences (C25) |
| experience with one importer and product (F10) | experience with other importers and products (F10) |