This research aims to understand the relationship between preferential margin and Free Trade Agreement (FTA) utilization rates in the case of the Philippines. It uses an empirical model to estimate this relationship using an FTA import ratio as a variable for utilization and the difference between most-favored-nation (MFN) and FTA tariff rates as a variable for margin. Findings suggest that the preferential margin is positively associated with the utilization rates for FTA agreements. Results are found to be relatively robust after controlling for different fixed effects variables. Among the Philippines’ FTA partners, margin is revealed to be significant in increasing imports from its neighbors in the Association of Southeast Asian Nations region. Furthermore, the study found a positive and significant relationship between margin and imports of nearly all commodity groups.
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