Methods for Ex Post Economic Evaluation of Free Trade Agreements

Evaluating the economic impact of an FTA is an important part of the monitoring and surveying process that should follow the establishment of an FTA. This paper presents methods for evaluating the trade and welfare effects of an FTA. These methods show how to (i) compute indicators for the utilization and value of preferences, (ii) qualitatively assess trade creation and diversion, (iii) quantitatively analyze the FTA‘s trade effects with trade indicators and the gravity model, and (iv) make inferences about economic welfare. This paper specifies the formulas, computational techniques, and data used for each evaluation method, and describes how to interpret the output from each method with examples taken from countries such as Viet Nam, Indonesia, and Cambodia. The strengths and limitations of each method are also discussed.regionalization; evaluation methods; preferential tariffs; trade indicators; gravity model; free trade agreements; Asia