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Heterogeneous Firms, Utilization Cost and FTA Utilization Rate
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TitleHeterogeneous Firms, Utilization Cost and FTA Utilization Rate  
AuthorHan Jian,Yue Wen and Liu Shuo  
OrganizationSchool of Business Nanjing University;Jiangnan University;; 
Key WordsHeterogeneous Firms; Free Trade Agreement; Utilization Rate; Utilization Cost 
AbstractUnder the framework of Ulloa & Wagner(2013), this paper builds a theoretical model which contains firm heterogeneity to investigate the firm’s choice of FTA to export. It concludes that the utilization cost is an important factor to influence the firm’s choice and only the productive firms can use FTA to export. Based on China's firm-level data, the paper analyzes the determinants of export under the preferential tariff. Empirical results show the margin of tariff between MFN and FTA and export volume can increase the utilization rate. But the effect of rule of origin will restrict firm’s use of free trade agreement. We further calculate the utilization cost of FTA between China and Switzerland, we find that the utilization cost has a remarkable decline after the treaty came into force after one year. But the restriction of ROO has a negative effect on utilization of FTA in cloth industry. This paper finally suggests the government to simplify procedures for certificate of origin, low the utilization cost of FTA, and help more firms to participate in negotiation and stipulation of international trade rules and enhance the ability to utilize free trade agreement in key industries. 
Serial NumberWP1290 
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