Abstract

The purposes of this paper are to assess U.S. preferential trade agreements (PTAs) effects especially to 1) analyze the impact of North American Free Trade Agreement (NAFTA) in U.S. green tea trade, and 2) analyze the impact of the Generalized System of Preferences (GSP) program for green tea trade to U.S. The author propose to apply the gravity equation for U.S. green tea imports by focusing PTAs effects. The period from 1989 to 2010 was examined. The gravity equation estimates have revealed that NAFTA has a positive effect on the trade flows. The GSP has a positive impact when model includes zero trade values.

Key words: Preferential trade agreements, gravity equation, North American Free Trade Agreement (NAFTA), generalized system of preferences.