Nonconventional Provisions in Regional Trade Agreements: Do They Enhance International Trade? (original) (raw)
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2016
Many recent papers have pointed to ambiguous trade effects of developing regional trade agreements (RTAs), calling for a reassessment of their economic merits. We focus on seven such agreements currently in force in Sub-Saharan Africa (ECOWAS and SADC), Asia (AFTA and SAPTA) and Latin America (CACM, CAN and MERCOSUR), estimating their impacts on their members ' trade flows. Instead of the usual dummy variables for RTAs, we propose a variable taking into account the number of years of membership. We then combine a gravity model with kernel estimation techniques so as to capture the non-monotonic trade effects while imposing minimal structure on the model. The results indicate that except for SAPTA, all these RTAs have had a positive impact on their members ' intra-trade over the estimation period (1960-1999). AFTA seems to be the most successful among them with an estimated positive impact on its members ’ imports from the rest of the world (ROW), but its impact on their ex...
Regional Trade Agreements and Bilateral Trade: An Eclectic View of the Hidden Trade Costs
SSRN Electronic Journal, 2015
Trade costs associated with institutional failures and political risks continue to serve as a big barrier to regional and international trade. Despite this strong impediment, limited work has been done to investigate the effect of weak institutions and type of political regime on bilateral trade. I therefore bolster this literature by investigating the effect of these hidden trade costs on bilateral trade. The paper employs an augmented gravity equation derived from a monopolistic competition model of product differentiation to examine this effect for a sample of 46 countries in three regional trade blocs (NAFTA, ECOWAS and EU (28)). Using the Poisson Quasi Maximum Likelihood (PQML), the Heckman two-stage, Tobit and Negative Binomial estimation techniques on the augmented gravity equation, this paper concluded that stronger institutions of trading partners leads to an increase in trade. I argue that stronger institutions of both the exporting and importing countries in the form of good regulatory and legal framework reduce the uncertainty in contract enforcement, transactions costs and ultimately increase trade. Differences in political regimes of trading partners also have a strong effect on trade. Results indicate that regional integration boosts bilateral trade, but there is evidence of trade diversion in WAMZ and MRU trading blocs. The proposition that geographically proximate partners traded more is supported according to the results, but there is little or no empirical support for the hypothesis that differences in factor endowment predict patterns of trade in the sample of countries. My sensitivity and robustness test results indicate that the parameter estimates are robust to different estimation techniques and specification of the gravity model.
Competition provisions in regional trade agreements : how to assure development gains
2005
Symbols of the United Nations documents are composed of capital letters combined with figures. Mention of such a symbol indicates a reference to a United Nations document. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. Unless indicated otherwise, Regional Trade Agreements (RTAs) is used as a generic term for bilateral or plurilateral free trade agreements, customs unions and common markets. Non-reciprocal preferential trade agreements such as Generalised System of Preferences (GSPs) are excluded.
Evaluating the Trade Effect of Developing Regional Trade Agreements: a Semiparametric Approach
2009
Many recent papers have pointed to ambiguous trade effects of developing regional trade agreements, calling for a reassessment of their economic merits. This paper focuses on 22 RTAs involving mostly developing countries and covering all the continents and use trade flows over the period 1962-2006. It proposes a two-step estimation approach to assess their trade impact: first estimate a gravity
A New Examination of the Impacts of Regional Trade Agreements on International Trade Patterns
Journal of Economic Integration, 2019
This paper assesses the ex-post effects on the international trading system of eighteen pluri-lateral regional trade agreements (RTAs) by examining their impacts on intra-bloc trade and on the tendency of members to trade with the rest of the world. This study is based on a gravity model with a solid theoretical foundation involving Anderson and van Wincoop's (2003) multilateral resistance terms. The model assesses 160 countries over a time period that extends from 1960 to 2014. Making use of the Poisson pseudo maximum likelihood (PPML) estimator and selecting the proper RTA variable and fixed effects settings, our analysis confirms the widespread trade-promoting effects of RTAs with mixed effects on extra-bloc trade. However, trade diversion in terms of bloc exports and imports are detected mostly in American and African trade agreements in many cases. By contrast, export and import creations are more prominent for RTAs in Europe and Asia.
Consequence of Regional Trade Agreements to Developing Countries
Journal of Economic Integration, 2014
We investigate the effects of 12 major Regional Trade Agreements (RTAs) on intraand extra-regional trade flows in member developing countries, both intra-RTA trade and the effect of RTAs on non-member trade over 1981~2008. We address and resolve statistical problems caused by logarithms, zero observations, and heteroskedasticity. Our regression results are not favorable to regional integration as a substitute for multilateral trade liberalization, although there are exceptions. Several RTAs fail to generate intrabloc trade creation. Seven of the 12 RTAs generate import trade diversion while most of the extra-bloc export dummies are not statistically significant. However, three of the five African RTAs in the sample increased intra-bloc trade. The differences in RTA performances are related to their implementation policies.
False Friends? Empirical Evidence on Trade Policy Substitution in Regional Trade Agreements
SSRN Electronic Journal, 2016
With cumbersome multilateral trade liberalisation under World Trade Organization (WTO) auspices, regional trade agreements (RTAs) have been experiencing a global revival as a second-best for the past 25 years with around 80% of all existing RTAs coming into force after 1989. While mutual tariff preferences appear to be a core concession among integration partners, the effect of RTAs on other-non-tariff-trade barriers is less straightforward. Concurrently with the proliferation of RTAs, the global trade community has witnessed massive growth in anti-dumping (AD) activity. Originally intended to prevent or offset "unfair" price setting in international trade relations, that is, selling an export good at a lower price abroad than domestically, the increase of AD measures-especially through a growing number of emerging and developing market users since the 1990s-has raised the concern that they are simply used as another protectionist instrument (
2018
This article investigates the effects of trade by observed economies on the intra-regional trade by South Asian Association for Regional Cooperation (SAARC) members using Poison pseudo maximum likelihood estimator (PPML) gravity models with panel data over the period 2008–2014. Eight SAARC members and eight observed countries, including the EU, are analysed in capturing the trade effect of observed economies on intra-regional trade in SAARC. This article provides an empirical measure of observers’ trade, FDI and Official development assistance (ODA) with SAARC if the exports and imports of observers to/from SAARC have positive or negative signs for intra-regional exports and imports. The results show that the exports and imports of observers to SAARC members have positive effects on bilateral exports among the members. The FDI of observers reduces the bilateral intra-imports in SAARC and ODA also has a negative effect on bilateral exports among the members. These results imply that ...