The depth of preferential trade agreements

• Main Authors: CHANG, Pao-Li, JIN, Wei, YAO, Kefang
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Preferential trade agreements; deep integration; regionalism; counterfactual quantitative simulation; International Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/2722; https://ink.library.smu.edu.sg/context/soe_research/article/3721/viewcontent/PTA_.pdf
• Institution: Singapore Management University

Preferential trade agreements (PTAs) have increased rapidly in number since the 1990s, and have extended their traditional focus on tariff reduction to include deeper integration in policy areas such as competition policy, intellectual property rights, investments, and movement of capital. This paper uses a comprehensive dataset on the content of PTAs to quantify the impacts of the depth of trade agreements on bilateral trade flows and national welfare across the world for the period 1980–2015. The results indicate that agreements that are deeper (by different definitions) contribute to larger trade growth and welfare gains. Furthermore, the results imply that the depth of trade agreements also matters for the interaction between regional integration (via PTAs) and multilateral trade liberalization (via GATT/WTO).