Measuring the Costs of FTA Utilization: Evidence from Transaction-level Import Data of Thailand

In this paper, we measure the costs for utilization of free trade agreement (FTA) tariff schemes. To do that, we use shipment-level Customs data on Thai imports, which identify not only the firms, source country, and commodity, but also the tariff schemes. We propose several measures as a proxy for the FTA utilization costs. The example includes the minimum amount of firm level saving of tariff payments, i.e. trade values under FTA schemes multiplied by the tariff margin, in all transactions. As a result, for example, the median costs for FTA utilization are estimated to be around two thousand US dollars in the case of exporting from China and around one thousand US dollars in the case of exporting from Korea. We also found that FTA utilization costs differ by rule of origin and industry.