Time to Preference: Early Preference Uptake under the EU-Canada Comprehensive Economic and Trade Agreement and the EU-Korea Free Trade Agreement

Abstract

This study examines the uptake of trade preferences under the EU-Canada Comprehensive Economic and Trade Agreement and the EU-Korea Free Trade Agreement during their respective first 21 months of application. The research analyzes the impact of time on the preference utilization rate of EU imports from Canada and Korea and EU exports to the two countries. The findings shed light on how EU member states perform vis-à-vis each trade partner and whether certain product groups appear more successful than others in terms of using trade preferences. The study further analyzes the potential effects of learning how to use preferences over time. Finally, the study argues that firm-pair transaction level data is necessary for discerning more conclusive answers regarding why trade preferences are (not) used.The results point to that lack of knowledge and awareness is the most plausible reason to a low use of trade preferences in the early days of an agreement. To increase preference utilization rates in the beginning as well as later during agreement implementation, continuous information campaigns appear to be essential, not least since importing and exporting firms change over time.