Study On The Impact Of Free Trade Agreements On Trade Costs

Since the second half of the 19th century,the world has experienced three major waves of globalization,and the process of trade liberalization has been accelerated,which has been followed by the decline of the trade costs of major countries.At the same time,the number of Free Trade Agreements signed worldwide is also increasing rapidly.In addition,the newly signed Free Trade Agreements include more high-standard "WTO-X" provisions,such as competition policy,capital flows,Labor standards and environmental protection.The simultaneous emergence of these two economic phenomena seems to suggest a link between the signing of Free Trade Agreements,or Free Trade Agreements with more "high-standard" provisions,and the fall in the cost of trade.However,most of scholars' quantitative studies on the relationship between the two regard Free Trade Agreement as a dummy variable to investigate its impact on trade cost.In fact,there is significant heterogeneity between Free Trade Agreements,and ignoring this heterogeneity tends to skew research results.So this article changed the traditional Free Trade Agreement as a virtual variables,to calculate the state combination(country-pair)between the actual number of Free Trade Agreements and core depth,try to open the "black box" of Free Trade Agreement,study its on the"quantity" and "quality" of different heterogeneity effect of trade costs.In this paper,the characteristics of Free Trade Agreements and trade costs has carried on the statistical analysis,the results show that both the number of Free Trade Agreements and the depth in the past 20 years have different amplitude increases,and the cost of trade in the same time it has experienced a sharp decline,this conclusion for agriculture,manufacturing,the overall level three departments are almost the same.In the empirical analysis,this paper takes the number and depth of Free Trade Agreements as the core variables to investigate their impact on agriculture,manufacturing and total trade costs,and uses the data of the core explanatory variables lagging for one period to deal with the endogenous problem of Free Trade Agreements.In order to test the theoretical mechanism of the influence of Free Trade Agreement on trade cost,the mediating effect models with tariff and institutional distance as mediating variables were constructed.In addition,this paper further analyzes the heterogeneous impact of intergenerational trade policies on trade costs,and finally conducts a robustness test.The empirical results show that:first,the increase in both the number and the depth of Free Trade Agreements has a significantly negative impact on the manufacturing industry and the total trade cost,but the opposite impact on the agricultural trade cost is positive.Secondly,ignoring the endogeneity of Free Trade Agreements will underestimate the impact of Free Trade Agreements on trade costs to some extent.Third,both tariff and institutional distance play an important mediating role in the process of reducing trade costs in a Free Trade Agreement.The signing of a Free Trade Agreement will significantly reduce tariffs and shorten the institutional distance,thus reducing trade costs.Fourth,no matter whether the legal enforceability is considered or not,the two generations of trade policy issues have the same impact on trade costs,but after considering the legal enforceability,the impact of both on trade costs will be reduced to a certain extent.Finally,based on the research conclusion and the actual situation,this paper provides specific suggestions for the future development of China's free Trade Agreements.First,actively expand the network of Free Trade Agreements and promote the process of trade liberalization.Second,move toward a high level of Free Trade Agreements and improve the quality of the network of Free Trade Agreements.Third,make clear the core interest appeal and seek the balance of interest appeal.