Exploring the effects of rules of origin and tariff margins on China's export enterprise under the China–Korea Free Trade Agreement

Abstract

This study explores the effects of rules of origin (ROOs) and tariff margin on China's export enterprise using Poisson pseudo-maximum likelihood estimation and logit models with product-level data under the China–Korea Free Trade Agreement (CKFTA). The findings reveal that increased ROOs have a negative effect on export value and enterprises' CKFTA use, while tariff margin is positively associated with export value. The estimation results examining export value also demonstrate that the effect of ROO is larger than that of tariff margin (in absolute terms); however, those concerning CKFTA use are the opposite. The study proposes suggestions for reducing enterprises' costs to promote trade and economic development between China and South Korea under the CKFTA based on the results.