Geneva Trade and Development Workshop: Kala Krishna - Learning to Use Trade Agreements'

On Monday 22nd November, Kala Krishna will present her paper "Learning to Use Trade Agreements'", joint with Carlos Salamanca, Yuta Suzuki, and Christian Volpe Martincus.

Abstract: Free trade or preferential trade areas (PTAs) allow importers who belong to the area to export to each other while paying zero or preferential tariffs as long as Rules of Origin (ROOs) are met. Meeting them is costly not only in terms of production costs but also in terms of documentation costs. We ask if these fixed costs of documentation change over time with the experience of the firm in obtaining preferential tariffs. We explore this using a unique importer-exporter matched transaction-level customs data set on a group of Latin American countries. Our estimating equation is model-based and shows that these fixed costs depend on the history of preference utilization. Most of the effect comes from experience in the same product and same partner, with some spillover to other partners buying the same product. There is little learning from experience in other products and other partners. When considering products that have been under preferences for a while, some learning might have occurred prior to the start of
our data. Using a natural experiment in Argentina, where some products were newly brought under preferences, we show that learning is indeed larger for such products. As facilitating preference use today also makes it easier to use preferences in the future, interventions early on in the life of the FTA to reduce such costs would be more effective.

The GTDW is an established regular trade and development seminar series organized jointly by the Geneva School of Economics and Management of the University of Geneva (GSEM), the Graduate Institute in Geneva (IHEID), the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization (WTO). After twelve years of running as an on-site seminar, the online edition of GTDW is co-organized with the Centre for Economic Policy Research (CEPR). Visit GTDW's website for further information:

Each meeting will take place on a Monday at 10.00 AM (ET) / 3.00 PM (GMT) / 4.00 PM (CET) and last for 1 hour and 15 minutes.