The breadth of preferential trade agreements and the margins of exports

Abstract

The paper uses recently available data on the core economic provisions of PTAs to identify which (types of) provisions seem to promote bilateral exports and the intensive and extensive margins of exports. Our evidence suggests that measures applied at the border on a preferential basis tend to expand existing trade relationships rather than generate new trade relationships, while measures applied behind the border do the opposite. The effects of measures applied on an MFN basis depend on the threshold used to define the intensive margin. Individual provisions fall into two categories, those that have consistent effects across both margins regardless of the threshold, and those that can have opposing effects on the two margins depending on the threshold. The study finds evidence that PTA effects strengthen through time.