Effects Of Trade Agreements Research Articles

A decade of Eurasian integration: An ex-post non-parametric assessment of the Eurasian economic union

This paper provides a sound ex-post evaluation of the impact of the Eurasian integration on member countries’ bilateral trade after a decade of implementation. We overcome the main limitations of current empirical analyses on the effects of trade agreements, namely the aggregation of tariff and non-tariff barriers and the likely self-selection bias, by applying a non-parametric method specifically designed to fully exploit time-series cross-sectional data. We thus compare the trade flows of the member countries in the Eurasian agreement with the exporter-importer pairs located in the Eurasian continent, which are most similar in terms of pre-treatment trends and features. Our results confirm the previous literature about the lack of a significant impact of the Eurasian customs union but find more positive net effects of the more recent integration steps. Our results ask for additional efforts to complete the Eurasian integration and let its member countries fully benefit from its hoped-for long-term effects.

The Effect of Trade Agreements on Korea’s Bilateral Trade Volume: Mitigating the Impact of Economic Uncertainty in Trading Countries

Purpose - This research empirically analyzes the influence of economic policy uncertainty and free trade agreements (FTAs) on bilateral trade volumes between Korea and its trading partners. The study investigates whether fluctuations in the Economic Policy Uncertainty Index (EPUI) for both Korea and its trading partners significantly impact trade volumes and whether the implementation of FTAs mitigates these effects.
 Design/methodology - The study employs dynamic panel data analysis using the system generalized method of moments (system GMM) estimation method to achieve its research objectives. It utilizes country-month-level panel data, including the EPUI, trade volume between Korea and its trading partner countries, and other pertinent variables. The use of system GMM allows for the control of potential endogeneity issues and the incorporation of country-specific and time-specific effects.
 Findings - The analysis yields significant results regarding the impact of economic policy uncertainty on Korea's exports and imports, particularly before the implementation of FTAs. An increase in the EPUI of trading partners leads to a notable increase in Korea's exports to them. Conversely, an increase in Korea's EPUI negatively affects its imports from trading partners. However, post-FTA implemen- tation, the influence of each country's EPUI on trade volume is neutralized, with no significant difference observed.
 Originality/value - This research contributes to the existing literature by providing empirical evidence on the interaction effects between economic policy uncertainty and FTAs on bilateral trade volumes. The study's uniqueness lies in its examination of how FTAs mitigate the impact of economic uncertainty on trade relations between countries. The findings underscore the importance of trade agreements as mechanisms to address economic risks and promote international trade relations. In a world where global market uncertainties persist, these insights can aid policymakers in Korea and other countries in enhancing their trade cooperation strategies and navigating challenges posed by evolving economic landscapes.

The Impact of Protecting EU Geographical Indications in Trade Agreements

The European Union protects over 1,000 Geographical Indications for distinctive regional foods such as Parma ham and Feta cheese. This paper tests whether external protection of Geographical Indications through trade agreements has increased exports of European Union Geographical Indications. The answer matters for trade policy, because the protection of at least some Geographical Indications has been a red line in recent trade negotiations. We use detailed export data for cheeses, covering the 2004–2019 period. The analysis uses the latest trade models that take into account the possibility of zero‐trade flows for certain goods. We find that legal protection of Geographical Indications in trade agreements does not generally lead to significant additional exports above and beyond the general export‐promoting effects of trade agreements. This finding should limit international fears of protected Geographical Indications widely displacing comparable products made outside of the European Union. However, although there is no significant effect across the board, more detailed analyses do find significant effects. In particular, Geographical Indications of higher quality and with higher market shares do benefit from stronger external legal protection. Based on these findings, the European Union may want to refocus its demands for protection of Geographical Indications during trade negotiations.

The WTO is not passé

Abstract The empirical literature on the effect of trade agreements has reached a consensus that WTO effects are insignificant or modest at best especially compared to the robust and strong positive effect of preferential trade agreements (PTAs) on bilateral trade (Rose, 2004; Eicher and Henn, 2011; Baier and Bergstrand, 2007, 2009). In this paper, we show that previous work that reports “average treatment effects” on trade flows fails to account for the heterogeneity in the effects of trade arrangements over time, leading to an underestimation of the WTO effect on bilateral trade. We present semi-parametric estimates of the impact of WTO membership, allowing for heterogeneity of WTO effects over time. We find evidence for strong WTO effects over time, with the WTO effects increasing almost monotonically with years of membership. In fact, in the long-term, the magnitude of the WTO effect exceeds those of the PTA effects. We also find that the strongest WTO effect over time is for destinations that are developing countries that underwent rigorous accession procedures to join the WTO. Disaggregating PTAs into bilateral, multilateral, and deep integration (customs union, common markets, and economic union), we find that the long-term effects of WTO membership dominate bilateral and multilateral PTAs but fall short of deep integration arrangements. Finally, we show that WTO membership increases both the extensive and intensive margins of trade over time, with a stronger impact on the former. Our results are consistent with gradual trade liberalization and declining trade policy uncertainty over time, following WTO membership.

The Effects of Trade Agreements on Imports of Biologics: Evidence from Chile

AbstractThis paper develops new indicators that measure the strength of intellectual property rights (IPR) provisions in Chile’s free trade agreements (FTAs). We use these new indicators to examine the extent to which FTAs with strong IPR provisions impact the volume, unit value and overall value of imported biologic medicines into Chile. We find that FTAs with more stringent IPR provisions increase both the volume and the unit value of imported biologics, suggesting greater availability of imported biologics at a higher price. Further research, however, is necessary to determine whether the increases in volume and unit prices of imports lead to greater universal access to biologics or greater inequity in access to these medicines.

Examining the Role of Policy and Cultural Determinants on Sectoral Export Competitiveness: Evidences from India

Exports are affected by several economic, political, social and cultural determinants. The objective of this study is to examine the role of policy and cultural determinants on export competitiveness for different sectors, estimate the technical efficiency (TE) and suggest focus areas to improve exports. The study uses the method of stochastic frontier analysis on the bilateral trade of India over the period 2000–2016. The result findings highlight that there is underutilization and ambiguous effect of trade agreements for all sectors except intermediate goods (IGs). Foreign direct investments outflow has positive results for all the sectors with capital goods getting benefitted the most. TE of exports shows positive trends for IGs, negative trend for raw materials, and mixed trend for consumer goods and capital goods sectors. IGs show the best export competitiveness, whereas RMs have the highest export potential. The results underline India’s progress in integrating with the global supply chain through increasing TE in exports of IGs.

The WTO Matters Strongly Over Time, But Unevenly Across Countries

The empirical literature on the effect of trade agreements has reached a consensus that WTO effects are insignificant or modest at best especially compared to the robust and strong positive effect of preferential trade agreements (PTAs) on bilateral trade (Rose, 2004; Eicher and Henn, 2011; Baier and Bergstrand, 2007, 2009). In this paper, we show that previous work that reports “average treatment effects” on trade flows fails to account for the heterogeneity in the effects of trade arrangements over time, leading to an underestimation of the WTO effect on bilateral trade. We present semi-parametric estimates of the impact of WTO membership, allowing for heterogeneity of WTO effects over time. We find evidence for strong WTO effects over time, with the WTO effects increasing almost monotonically with years of membership. In fact, in the long-term, the magnitude of the WTO effect exceeds those of the PTA effects. We also find that the strongest WTO effect over time is for destinations that are developing countries that underwent rigorous accession procedures to join the WTO. Disaggregating PTAs into bilateral, multilateral, and deep integration (customs union, common markets, and economic union), we find that the long-term effects of WTO membership dominate bilateral and multilateral PTAs but fall short of deep integration arrangements. Finally, we show that WTO membership increases both the extensive and intensive margins of trade over time, with a stronger impact on the former. Our results are consistent with gradual trade liberalization and declining trade policy uncertainty over time, following WTO membership.

International supply chains and trade agreements

ABSTRACTThere is a growing literature that examines the role of trade agreements on the formation of international supply chains. The evidence indicates that in general countries that share trade agreements are more likely to develope cross-border supply chains. In this analysis, we argue that in order to examine the effects of trade agreements on the formation of supply chains between two countries, it is not enough to analyse the impact of the trade agreements that the two countries share but it is also important to assess the impact of the trade agreements that they share with third countries. Using data on trade in value added for 129 countries, we show empirically that about 40% of the potential increase in trade in value added induced by a trade agreement between an importing country and a sourcing partner is wiped out by each additional trade agreement signed by the importing country with third nations in which the sourcing partner is not a member. The result has important implications for regions seeking to develop international supply chains but in which the process of integration is highly fragmented.

The Role of Institutional Environment in International Trade. The Case of Spanish Regions

We move beyond the nation-state as the unit of analysis and use subnational spatial variation to study the effect of the institutional environment on international trade. Additionally, we address the heterogeneous effect of trade agreements on different regions within a country. Employing a gravity model approach, we use a region-to-country dataset to estimate the determinants of Spanish regional exports and we apply quantile regressions for panel data. We find that better institutional quality of trade agreements leads to an increase in both the intensive and the extensive margins of trade. The institutional quality of trade agreements exerts a differential effect on regional exports at different locations within a country, although differences across Spanish regions seem to be larger for the intensive margin than for the extensive margin. We do, however, find a common trend: for the relatively more important exporting regions, the institutional quality of TAs is less relevant for trade margins. Therefore, our results posit that subnational spatial variation should be added to the analysis of the determinants of international trade flows.

The Effect of Binding Commitments on Services Trade

It has long been established in theory that uncertainty impacts on firm behaviour. However, the empirical basis for quantifying the uncertainty-reducing effects of trade agreements has not been firmly established. In this paper, we develop estimates of the effect of reducing uncertainty regarding market access on cross-border services trade by making commitments that are bound under a trade agreement. Specifically, we identify the effect of services trade restrictions on cross-border services trade, as measured by the OECD’s Services Trade Restrictiveness Index (STRI), and the separate effect of “water” in countries’ WTO bindings, as assessed by the difference between their commitments under the General Agreement on Trade in Services and their applied level of market access, as captured by their STRI scores. Using a gravity model, we find that services trade responds positively but inelastically to reductions in services trade barriers, as measured by the STRI, and that the response to actual restrictions is about twice as strong as the response to comparable reductions in uncertainty, as measured by water. Responses are highly heterogeneous across services sectors. We suggest how these results can be used provisionally to quantitatively assess the impact of trade agreements in CGE modelling frameworks, taking into account not only actual liberalization of market access terms and conditions, but also the extent of binding of those commitments.

Heterogeneous trade agreements, WTO membership and international trade: an analysis using matching econometrics

This article explores the heterogeneous effects of trade agreements (TAs) and World Trade Organization (WTO) membership on the volume of international trade. We extend Baier and Bergstrand’s (2009a) application of matching econometrics by distinguishing between different types of TAs and WTO participation and account for the endogenous nature of trade policy. For a panel data set covering 1960–2005 and 187 countries, we find that the treatment effect on international trade systematically varies with the type of TA and WTO membership.

A Note on Building a Counterfactual for Mercosur

ABSTRACT Heterogeneity among trade agreements across Latin American countries is important for comparing different experiences and for evaluating the success of existing trade agreements. This note evaluates the Mercosur agreement in a counterfactual framework. Member countries’ experiences are compared to the Mexican experience in several dimensions other than trade. In particular, the effect of trade agreements is evaluated in terms of its effect on the labor market (inequality and informality) and on other measures of integration. This new analysis puts Mercosur in a more positive balance with respect to the pure trade theory analysis.

The effects of trade agreements on the growth of major Latin American economies

While the connection between trade openness and economic growth is generally assumed to be positive, empirically, it is not clearly demonstrable. Examinations of the relationship between trade and growth have taken a number of approaches, differing both in the empirical methods, as well as the proxies employed for trade openness, trade liberalization, and growth, but results have been decidedly mixed. Our research differs from prior studies in that it does not examine whether trade policy, trade liberalization or the level of trade itself enhances GDP; but rather whether participating in a specific type of trade agreement/union and/or the number of trade agreements to which a given country or region belongs enhances a country's level of growth. For this purpose, we study the relationship between trade agreements and growth for 18 Latin American countries between 1960 and 2008. Empirical analysis uses an adaptation of the neoclassical Solow growth model. Even though supporters of globalization advance the notion that involvement in trade agreements will help a country's economy, our findings suggest that that may not be consistently so.

The Effects of Trade Agreements on Trade: Asymmetric Partners and Types of Agreements

The Effects of Trade Agreements on Trade: Asymmetric Partners and Types of Agreements

Are there Potential Economic Benefits from China-Nigeria Trade Agreements

This study examined the potential economic gains and losses from trade agreements between China and Nigeria. A gravity model was implemented using panel data analysis to discern the drivers of trade and simulate the effects of trade agreements between the two countries. Empirical results showed that economic size of both countries played a major role in promoting trade between them. Also, the levels of tariffs in China and Nigeria were important. Simulation experiments revealed that under a non-reciprocal tariff reduction in China by 25 per cent,50 per cent,75 per cent and 100 per cent in all traded products, Nigeria will record positive growth of export. Similarly, a reciprocal tariff reduction agreement by China and Nigeria, by the same magnitude will lead to a rise in Nigeria’s export of all products particularly chemicals, mineral fuels and some manufactured products by over 100.0 per cent while China’s exports to Nigeria will rise by between 32.0 per cent per cent and 43.0 per cent (for miscellaneous manufactures and crude materials). Keywords: Trade agreements, Potential gains and losses, China, Nigeria, Gravity model, Panel data models, Simulations. JEL Classification: F14: F15: F59, C15, C23, C33

Evaluating the Intra–regional Exports and Trade Creation and Trade Diversion Effects of Trade Agreements in SAARC Countries

Notwithstanding the persevering endeavours of South Asian Association for Regional Cooperation (SAARC) countries to enhance economic cooperation and intra–regional trade, contentions exist amongst analysts on the objective that has remained rather elusive for over two decades. Against this backdrop, this article investigates the impact of trade agreements amongst SAARC countries on intra–regional exports by employing an augmented gravity model and a pooled panel data for the period 1980–2005. Empirical tests find scant evidence of the impact of trade agreements on exports in the pre–SAARC and pre–South Asian Preferential Trading Arrangement (SAPTA) periods, but discern a statistically significant and positive impact in the post–SAARC and post–SAPTA periods. Further tests suggest a clear evidence of trade creation above and beyond the catalytic effect of SAPTA, but only for those countries that have trade agreements in place, while the reverse is true for those that do not have such agreements. Also, the increased exports in the latter half of the period under consideration emanates as a combined effect of SAPTA as well as the delayed impact from the existing bilateral trade agreements amongst the member states.

Commentary: The United States, Agriculture, and the Doha Round of Negotiations

A commentary on Patrick Messerlin's article, "Agricultural Trade Liberalization." Cathy Jabara is the Division Chief of the Agriculture and Fishery Products Division at the U.S. International Trade Commission. She has been at the Commission for about 12 years, and previously served in positions at the Economic Research Service at the U.S. Department of Agriculture and the U.S. Treasury Department. She received her Ph.D. in Agricultural Economics at Purdue University. She is primarily involved in the research program at the Commission. Her responsibilities include analysis of the effects of trade agreements on the U.S. economy and industries.

The Effects of Trade Agreements on Brazilian Economy: A Summary

The present article is a review of some recent works on the effects of the FTAA and the EU-Mercosur agreement on the Brazilian economy. We present these works' main results, emphasizing their methodological differences and limitations. Their results seem to be very diverse and very sensible to the chosen methodology.

The Impact of the North American Free Trade Agreement on the Economy of Western New York

This article examines the economic impact of the North American Free Trade Agreement (NAFTA) on western New York (WNY). A variety of theoretical perspectives are reviewed, notably impact assessment. Evidence from a survey of local industrial firms suggests that NAFTA has not played an especially important role in the various upswings and downswings that have affected the WNY area in the 1990s. In contrast to a number of inquiries that have appeared in the recent literature, the authors find little evidence to support the view that WNY has been negatively affected by NAFTA. Instead, the authors’ evidence suggests that NAFTA has had a positive impact in terms of new export development, job creation, input sourcing, and sales growth. The article concludes with a brief discussion of the empirical and theoretical difficulties that confront researchers who wish to explore the effects of trade agreements upon regional economies.

Competition in agriculture: the United States in the World Market

Contents * About the Editors * Contributors * Foreword * Chapter 1. Introduction * Agricultural Exports * Competitiveness * Plan of Book * References * Chapter 2. Agricultural Competitiveness Issues and Concepts * Issues in Agricultural Competitiveness * Definitions of Competitiveness * Factors Influencing Competitiveness * Indicators of Competitiveness * Chapter 3. The Competitiveness of U.S. Agriculture * Introduction * A Conceptual Framework * The Case of U.S. Agriculture * Comparison of Agricultural Growth in the United States and European Union * Conclusions * Chapter 4. Corn * Introduction * The Record: Changing Competitiveness in the U.S. Corn Industry * Market Developments Influencing Competitiveness * U.S. Policy and Competitiveness * U.S. Trade Agreements and Corn Exports * Indirect Effects of International Policy Changes * Biotechnology and Competitiveness in the Corn Industry * Export Performance and Technology Adoption * Market Structure * Conclusions * Chapter 5. Wheat * Introduction * World Wheat Industry * Trade Agreements and Policies * Regional and National Competitiveness * Conclusions * Chapter 6. Rice * Introduction * United States Relative Cost of Production and Milling * United States Agriculture Policy * Rice Trade Agreements, Rules, and Regulations * Impact of El Nino on Global Rice Production * The Arkansas Global Rice Model * Conclusions * Chapter 7. Soybeans * Introduction * Soybean Trade Research * Competitive Position of the U.S. Soybean Industry * Trade Agreements * Conclusions * Chapter 8. Cotton * Introduction * Imports and Exports * Trade Research in Cotton * Competitiveness of U.S. Cotton * Conclusions * Chapter 9. Peanuts * Production * Trade * Competitive Position of the U.S. Peanut Industry * Agriculture and Trade Policy * Conclusions * Chapter 10. Fruits * Introduction * Fruit Production * Citrus Fruits * Noncitrus Fruit * Agricultural and Trade Policy Impacts * Conclusions * Chapter 11. Vegetables * Introduction * Vegetable Trade Research * Competitive Position of the U.S. Vegetable Industry * Conclusions * Chapter 12. Miscellaneous Crops * Wine * Sugar * Tobacco * Implications for U.S. Trade in Wine, Sugar, and Tobacco * Chapter 13. Beef * Introduction * The Changing Dynamics of World Beef Demand * Overview of World Meat and Fish Consumption, 1985-1997 * Trends in World Beef Production, 1985-1997 * Trends in World Beef Consumption, 1985-1997 * Trends in World Beef Trade, 1985-1997 * U.S. Competitiveness in World Beef Markets * Conclusion * Chapter 14. Poultry * Poultry Trade Research * Competitive Position of the U.S. Poultry Industry * Conclusions * Chapter 15. Pork * Introduction * Structural Change in U.S. Port Industry * The Changing Dynamics of Port Consumption * U.S. Competitiveness in Global Port Markets * Conclusions * Chapter 16. The Food Processing Industry * Introduction * U.S. Exports of Processed Foods * U.S. Imports of Processed Foods * The Competitive Environment for Processed Foods * Competitive Position of the United States * Trade Agreements, Rules, and Regulations * Conclusions * Chapter 17. North American Free Trade and U.S. Agriculture * Introduction * CUSTA and NAFTA Implementation * Overview of Agricultural Trade in NAFTA Countries * NAFTA Impacts on Selected Commodities * Animals and Animal Products * Grains and Oilseeds * Horticultural Products * Other Commodities * Conclusions * Chapter 18. Biotechnology and Competitiveness * Introduction * Agrobiotechnology and Value Creation * Value Appropriation and Firm and Industry Competitiveness * Network Competitiveness * Impacts of Agrobiotechnology on National Competitiveness * Conclusions * Chapter 19. Findings and Implications * Introduction * Importance of Agricultural Exports * Market Shares * Factors Affecting Competitiveness * Technology * Effects of Trade Agreements * Conclusions * Index * Reference Notes Included