Premium
Impact of tariff rates on the probability of trade relationship survival: Evidence from ASEAN+6 manufactured goods
Author(s) -
Lin ChinHo
Publication year - 2020
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.12260
Subject(s) - tariff , economics , product (mathematics) , international economics , duration (music) , international trade , mathematics , art , geometry , literature
This article explores the links between imported trade relationships, their duration and tariff rates. We use survival analysis to investigate how the probability of trade relationship survival is affected by the difference in the tariff rates. We use the ASEAN+6 as the basis of our report and consider a total of 89 trading partners for manufactured goods from 1996 to 2011. Our findings are as follows. First, low‐tariff trade survives longer than high‐tariff trade of manufactured goods. Second, we find a significantly negative correlation between tariff rates and duration, and regional trade agreements help prolong the length of trade relationships. Third, the hazard ratios of intraregional differentiated goods and the parts and components trade are lower. We have also obtained robust results for distinct specifications through consideration of production networks and Rauch's product classification. Finally, we believe that these findings could be used as a reference for other economic organizations working toward the diminution of tariff rates.