Commercial Relation Korea (Rep. of)–Colombia 2014–2019 : Economic Overview of Merchandise Trade
Jalil Ramírez, Alejandro
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This work provides insight into the effects of the Korea–Colombia free trade agreement in force since 2016. The analysis discusses the nature, volume, and composition variations in trade between these two countries through 2014–2019, to comprise the years before and after the treaty. For this purpose, the first section provides a general overview of the agreement, including the most relevant tariff and non-tariff concessions. The study then proceeds with both countries' economic outlook, including an industry-level characterization of each party's trade profile —both to the world and each other— and estimates their level of intra-industry trade. Furthermore, the document estimates the association between yearly exports —setting each HS heading as the unit of analysis— and tariff liberalization employing a fixed-effects regression and controlling for time-varying confounders (e.g., exports to the ROW, real exchange rates, and the GDP of the country of destination), and defining a counterfactual third country under a Difference-in-Differences setting. Evidence from this study indicates that customs duties reductions have positively impacted Korean exports to Colombia through the reference period, but not vice versa. The last section presents a case study on the market concentration of fruit and nut exports from Colombia to Korea. The case study details the observations obtained from computing and studying the evolution of the Herfindahl-Hirschman index. The findings obtained across the different sections are the foundations for additional conclusions and recommendations.