Horizontal Depth A New Database On The Content Of Preferential Trade Agreements

Horizontal Depth A New Database On The Content Of Preferential Trade Agreements

Trade agreements such as NAFTA and the EU have complemented multilateral integration and helped support trade growth. These agreements have tended to cover areas that have not been fully dealt with at the multilateral level, and the provisions in many of these areas are inherently non-discriminatory and also promote trade with third countries. Our research shows that repealing these agreements would harm not only participating countries, but also their other trading partners. Table 1 Areas of Action generally included in agreements of different depths Some examples may help to put these results into perspective. We are focusing on three increasingly profound trade agreements – in relation to the number of policy areas covered by the treaty – namely Peru-Chile, Korea-US and the EU. Based on our preferred specifications, a flat agreement, such as Peru-Chile, increased bilateral trade by about 10%, but had only a negligible impact on non-members. Korea-U.S., a medium-deep PTA, increased trade by 14% and increased external exports by 4%. Finally, our estimates indicate that the deepest convergence of our sample, the EU, increased trade flows between members by 44%, while exports from third countries would be about 30% lower without the agreement. Note: A provision is categorized as a specific category when it is covered by more than 60% of the Agreements in this Brexit category and the renegotiation of NAFTA has taken the interest of policymakers in the impact of trade agreements on trade and the consequences of their repeal (Blanchard 2017, Dhingra et al.

2016, Mulabdic et al. 2017). In a recent paper, we use new information on the content of preferential trade agreements (ATPs) to study the commercial effects of deep integration (Mattoo et al. 2017). Our results can mark the current debate on the consequences of disintegration. In order to assess the impact of substantive agreements on trade by members and non-members, we are expanding a standard gravity model with one variable that covers the depth of agreements between PTA members and another that covers the depth of a trading partner`s agreements with other countries. Using information from a database on the content of PTAs (Hofmann et al. 2017), we build different depths based on the policies governed by the agreements and their legal applicability. Our sample includes 96 countries, including all major economies, for the period 2002-2014. The number of trade agreements has increased significantly since the early 1990s. Considering only the EPAs still in force in 2015, the number of preferential schemes increased from 20 in 1990 to 279 at the end of 2015. The content of the PTAs has also changed.

Recent agreements are deeper in the sense that the range of policies covered has been expanded.