An Analysis of the Trade Cost Effects of Korea’s FTAs : Evidence from Manufacturing

Key Points

• This research assesses the impact of Korea's free trade agreements (FTAs) on trade costs in manufacturing from 2004 to 2020.
• Utilized panel data from 2004–2020.
• Applied staggered adoption model and event study methods.
• Conducted comparisons with not-yet-treated countries as control groups.
• Tested parallel trends assumption using pre-trends analysis.
• FTA adoption significantly reduced total and non-tariff trade costs by approximately 7%.
• Post-adoption effects showed a consistent downward trend in trade costs.
• No statistically significant average effect observed for tariff costs.
• Subgroup analysis indicated significant reduction in tariff costs for upper-middle-income countries, but not for high- or lower-middle-income groups.