자유무역협정(Free Trade Agreements)이 무역비용에 미친 영향

The Effect of FTAs on Trade Costs: Evidence from South Korea’s FTA

We explore whether Free Trade Agreements (FTAs) have positive effects on market integration between South Korea and its FTA partners. When market integration occurs among countries, trade costs between them would be lower. Since the objective of FTA is market integration, trade costs may be lower between them after FTA comes into effect. Therefore, we investigate if trade costs between them have decreased after FTA to see whether greater market integration has been achieved between them. We employ a non-linear time series model, the Threshold Autoregressive (TAR) model, to measure trade costs for some tradable goods between South Korea and its FTA partners for both pre-and post-FTA over the sample periods from January 1998 to November 2017. Also, we introduce a threshold break at the effective FTA date to test whether trade costs between South Korea and its FTA partners have significantly been reduced after FTA. We find that the effect of FTA on trade costs varies across FTA partners and products. These findings imply that the effect of FTA on market integration is not consistent across FTA partners and products.