Economic Impacts of Free Trade Agreements (FTAs)

Abstract

This paper analyzes the impacts of free trade agreements (FTAs) from both quality and quantity aspects. The qualitative analysis of FTAs in terms of trade in goods, trade in services, direct investment and safeguard measures showed higher level of liberalization for FTAs involving developed countries than developing countries. The analysis of the quantitative effects showed a trade expansion effect for many FTAs. The analysis found various obstacles, which include high cost of obtaining a certificate of origin and low FTA preferential tariff margins, for using FTAs. The obstacles have to be removed, in order to increase the use of FTAs, thereby to promote foreign trade.