Regional Trade Agreements Research Articles

How far India has succeeded in harnessing its export potential in rice? Evidence Using Stochastic Frontier Gravity Model

This study employs the stochastic frontier gravity model (SFGM) to objectively assess the determinants of India’s rice exports from 2001 to 2019 across 22 major export destinations, highlighting untapped export potential and providing actionable policy recommendations for enhancing competitiveness in global rice markets. Results show that India's economic growth (GDP) and the GDP of importing nations positively impact rice exports. Conversely, geographical distances (representing transportation costs) and higher import tariffs act as deterrents. The devaluation of the Indian rupee positively influences export revenues. Common language benefits exports, while regional trade agreements show minimal impact. The study estimates significant untapped export potential between India and its partners, emphasizing the need for improved trade facilitation, logistics, and agreements. To maximize India's rice export potential, policymakers should prioritize quality compliance, streamline regulations, and invest in infrastructure and R&D for rice cultivars. Negotiating favorable trade agreements and implementing existing export policies like the New Agricultural Export Policy will aid market access and competitiveness.

Cheaper and faster: The role of air services agreements on transportation

AbstractRules of international air transportation services that apply to signatories' airlines are defined by air services agreements (ASAs). We assess the impact of bilateral ASAs on air transportation using an unique data set providing direct observations of bilateral air transport cost and time for a standardised good, for 1190 country‐pairs, between 2011 and 2015. Our results show that ASAs reduce transportation cost by 8% while they only impact transportation time for landlocked countries and Regional Trade Agreements (RTA) members. Our estimates also reveal that bilateral trade decreases cost of transport, which highlights the role of backhauling in air transportation.

Absolute and size‐adjusted trade flows: An analysis of RTAs and GATT/WTO membership

AbstractThis paper contributes to the debate on whether membership of the General Agreement on Tariffs and Trade/World Trade Organisation (GATT/WTO) promotes greater levels of international trade. A size‐adjusted measure of trade flows vis‐á‐vis absolute trade flows (the traditional dependent variable) is used. The size‐adjusted trade flows dependent variable reduces the importance of bilateral trade with larger countries yielding a greater balance between large and small trade partners and provides an opportunity to test the importance of membership of the GATT/WTO relative to the numerous regional trade agreements (RTAs) which have grown exponentially over the years. In keeping with the recent literature, a structural gravity model of trade framework is used with a Poisson pseudo‐maximum‐likelihood estimator and high dimensional fixed effects. Furthermore, the data set consists of both international and intra‐national (domestic) trade flows. In the case of both approaches (size‐adjusted and absolute trade flows) the results are statistically significant and positive as regards the impact of GATT/WTO membership and RTAs on trade flows. Furthermore, the estimates resulting from size‐adjusted trade flows maintain the greater importance of GATT/WTO membership relative to RTAs.

Trade Policy Review of Turkey

AbstractThis paper examines the WTO's 2023 Trade Policy Review (TPR) of Turkey, covering 2016–2022. As Turkey marked its centenary in 2023, the TPR allows for critical reflections on Turkey's global and European economic integration and its evolving economic policies. The review period witnessed key developments: heightened tensions with the European Union (EU), the country's transition into a presidential system, and the impacts of COVID‐19 and the Ukraine war. Turkey continued its state‐led development and proactive industrial policy post‐Global Financial Crisis, aiming to reduce the current account deficit, diversify exports, advance technological sophistication and enhance its position in global value chains (GVCs). Recently Turkey has further aligned its import–export regimes and trade negotiations with these strategic goals, increasing its Most Favoured Nation tariffs and adopting localisation strategies to support key sectors. Turkey navigated the pandemic effectively, bolstering its role in global supply chains, as indicated by its increased trade‐to‐GDP ratio. This underscores its economic resilience and strategic location. However, Turkey's trade policies are increasingly diverging from those of the EU, its main trade and supply chain partner and Customs Union ally. Turkey's new Regional Trade Agreements aim for deeper sectoral integration with partners other than the EU.

Sectoral Composition of Outward FDI and its Impact on Export Diversification in Saudi Arabia

This research explores the relationship between outward foreign direct investment (FDI) and export diversification in emerging economies, with a focus on the case study of Saudi Arabia. Utilizing a multi-equation model and vector autoregression analysis, the study investigates various factors such as the level and sectoral composition of outward FDI, income levels, institutional factors, and regional trade agreements. The findings suggest that while outward FDI can influence export diversification, its impact varies based on factors such as the sectoral distribution of investments, income levels, and institutional quality. Additionally, cointegration and vector error correction models reveal long-term relationships among key variables, highlighting the complex interplay between economic development, governance, and investment patterns. Impulse response analysis sheds light on the dynamic nature of shocks and their effects on the economy over time, emphasizing the interconnectedness of variables. Variance decomposition analysis further elucidates the significance of shocks in explaining fluctuations in model variables, underscoring the systemic interdependencies at play. Overall, the study provides valuable insights into the mechanisms through which outward FDI influences export diversification and economic development in emerging economies like Saudi Arabia and institutional reforms are essential; strengthening institutions and improving regulatory frameworks can amplify the positive effects of outward FDI on export diversification.

An Investigation on the Effectiveness and Trade Direction of ASEAN Trade Agreements

This study aims to evaluate the effectiveness of the ASEAN regional trade agreement by comparing the growth rates of intra-ASEAN trade with those of the rest of the world as well as with major trading countries, China, the USA, the EU, and India. The objective of this research is threefold: To identify existing trade trends, to determine the underlying explanations for these trends, and finally, to compare intra-ASEAN trade trends with the inter-ASEAN countries’ trade trends. This paper takes a descriptive approach and dynamic panel GMM methods spanning the years 1990 to 2019. Between 2005 and 2019, growth rates among members of intra-ASEAN, Indonesia-Malaysia, Indonesia-Thailand, Singapore-Thailand, Malaysia-Philippines, and Philippines-Thailand, all decreased. Additionally, although the market share of imports and exports within ASEAN has decreased over time, the market share of imports and exports of inter-ASEAN has increased, especially with China and India. The results of descriptive analysis of inter-ASEAN trade openness are supported by first-differenced GMM and system GMM. This is the first study to examine historical intra-ASEAN trade trends and growth and compare them to inter-ASEAN trade trends and growth to determine whether AFTA has a greater impact on intra-ASEAN trade growth than on inter-ASEAN trade growth using updated aggregated data. This study sheds light on the fact that over the periods intra-ASEAN trade could not outperform inter-ASEAN trade by a significant margin due to trade diversity challenges and incomplete implementation of WTO regulations.

Article: Lost in Transliteration: The Role of Interpretation in Resolving Regional Trade Agreement Conflicts Relating to Geographical Indications

There are two models of regional trade agreement (RTA) that regulate the protection of geographical indications (GIs), one primarily advanced by the EU and the other by the US. Countries negotiating with both sides could be caught in the middle of potentially conflicting demands. This article examines this issue with reference to RTA obligations on the protection of translations and transliterations of GIs. It applies international law interpretive techniques to assess the prospect of agreement conflict. An analysis of the object and purpose of the RTAs, the justifications for protecting intellectual property (IP) and the history of translation and transliteration protection, both internationally and in the EU and US, allows for a harmonious interpretation of the obligations so as to avoid incompatibility. The article concludes by assessing the policy implications of this finding, including the importance of taking advantage of the margin of flexibility inherent in the implementation of RTAs.

담배 제품의 간접광고 금지와 WTO 규정과의 일치성 검토

Purpose: This paper examines whether the ban on indirect tobacco advertising is a potential legal issue under the relevant WTO agreements and explores interpretative solutions. Research design, data, and methodology: In a strict sense, prohibiting brand extension and partnership can be judged as a violation of Articles 15.1 and 15.4 of the Intellectual Property Rights Agreement on Trademark Registration Obligations (hereinafter referred to as the TRIPS Agreement). On the other hand, with Article 20 of the TRIPS Agreement and Article III:4 of the GATT, this study reviewed many aspects of consistency with the provisions of the GATS and TBT agreements. Results: Particular attention should be paid to legal issues related to regional trade agreements (Mega-FTA and investment treaties) or the constitutions of individual countries (freedom of expression), including Korea, and additional legal foundations must be established. Conclusions: This paper finds that governments face fewer legal challenges based on WTO-related trade rules than legal challenges based on regional trade agreements or domestic constitutions. A review of the relevant international trade rules of the WTO does not appear to pose the greatest obstacle to member countries adopting a ban on product placement for tobacco products.

Application and Impact of the Provisions on Technology Transfer in the Regional Agreement

In the context of the lagging legislation of international technology transfer and the lack of unified regulation, the WTO cannot effectively use the dispute settlement mechanism to resolve the related contradictions arising from technology transfer. Signing regional trade agreements has gradually become the main means to regulate and promote technology transfer. However, the developing countries that rely on "market for technology" are often in a passive position, facing the difficulties of signing regional clauses caused by the technology transfer barriers of developed countries and the imperfect means of technology circulation and protection of developing countries, and urgently need to put forward their own countermeasures. In particular, China needs to innovate the domestic technology transfer system through the standard regional trade agreement rules to help our country maintain a good regional trade partnership. By clarifying the application conditions and effects of regional trade agreements, this paper proposes to improve the universality of regional trade agreements from the perspective of international formulation of uniform regulations.

The trade effect of regional trade agreements in the presence of duty drawbacks

AbstractBefore regional trade agreements (RTAs) come into force, some firms enjoy duty‐free imports using other tariff regimes such as a duty drawback (DD) regime. For such firms, the use of RTA tariff regimes will not provide additional benefits in terms of duty exemption. In this study, we examine the trade effects of RTAs in the presence of a DD regime. We theoretically demonstrate that firms that switch from a DD to an RTA regime will either increase or decrease their imports. Subsequently, we empirically analyse the effect of this switching on imports using firm‐level trade data from Thailand. The empirical results show that switching firms either increase or do not change their imports. Our data also suggest that this increase in imported inputs is used to produce goods for the domestic market, not the export market. We also reveal that relatively small‐sized firms tend to switch to the RTA regime, while relatively large‐sized firms continue importing under the DD regime even after the entry of RTAs into force. With these results, we discuss the implication for the magnitude of trade creation effects of RTAs under the presence of DD regimes.

How interstate soft conflicts affect bilateral migration: Results from a structural gravity model

This study aims to empirically examine the impact of interstate soft conflicts on bilateral migration. Interstate soft conflicts that arise when diplomacy fails and a military operation seems too extreme may act as a policy tool and have a negative effect on bilateral relations. The empirical approach uses balanced panel data with annual observations and a theory-consistent structural gravity model of migration, augmented by a new measure of interstate soft conflict. The findings suggest that interstate soft conflicts have a lasting adverse effect on migration, regardless of the control for omitted variables (presence of regional trade agreements, various types of sanctions, the state acts, and militarized interstate disputes) and different model specifications. More specifically, these conflicts result in an average reduction of about 23.35% in bilateral migration. After accounting for the time delay in the effect and addressing reverse causality, the findings suggest that interstate soft conflicts may exert a prolonged (the effect disappears after three years) adverse impact on bilateral migration flows, causing a reduction of approximately 34.22%. Therefore, the study’s findings not only illuminate the complex relationship between soft conflicts and migration but also underscore their significant implications. These insights are valuable for policymakers and researchers, providing a solid foundation for informed decision-making and further exploring this complex issue.

Do environmental provisions in regional trade agreements help to increase environmental innovation?

ABSTRACT Assessing the effectiveness of environmental provisions in regional trade agreements (RTAs) on environmental outcome is important. This paper calculates the RTA strength with environmental provisions and RTA strength without environmental provisions. Then we explore the effect of environmental provisions in RTAs on environmental innovation using panel data for 77 countries from 1995 to 2013. The empirical results show that the overall RTA intensity signed by a country has no significant impact on environmental innovation. However, there are some differences when considering the presence of environmental provisions. Specifically, the RTA intensity with environmental provisions has no significant effect on its environmental innovation. However, a significant negative relationship exists between RTA intensity without environmental provisions and environmental innovation. Our conclusion provides policy insights for policymakers considering incorporating environmental provisions into RTAs.

Do deep regional trade agreements facilitate international research collaboration?

ABSTRACT We examine whether regional trade agreements (RTAs) facilitate international research collaboration. First, using a two-country model of a continuum of oligopolistic industries with process research and development (R&D) investment and spillovers, we analyze whether trade liberalization through a trade agreement with shallow or deep economic integration increases the number of firms that collaborate. We then empirically investigate the effects of shallow and deep RTAs by employing data on patents with multiple inventors from different countries at the United States Patent and Trademark Office for 114 countries/regions over 1990–2015. We interpret co-inventions by inventors from different countries as evidence of international research collaboration. We find that both shallow and deep RTAs are positively associated with research collaboration among member countries, and that the effect of deep RTAs on international research collaboration is stronger than that of shallow RTAs under certain conditions.

Structural Evolution and Its Determinants of Domestic Value-Added Network of Digital Service Exports Based on Temporal Exponential Random Graph Model

ABSTRACT Digital service trade has become an important engine of world economic growth, and its competitive landscape is also evolving. We construct domestic value-added networks of digital service exports (DVAN-DSEs) from 1995 to 2018 based on the world input-output table, and explores their structural evolution and determinants using Temporal Exponential Random Graph Model. We find that (a) the DVAN-DSEs present the features of agglomeration, heterogeneity, reciprocity and unevenness. (b) The United States and European countries are the core in DVAN-DSEs. (c) Preference attachment, structural embeddedness, delayed reciprocity, stability, variability, Matthew effect in GDP, population and Internet coverage, geographical proximity, cultural similarities, and regional trade agreements play important roles in the evolution of DVAN-DSEs. (d) Structural embeddedness and geographic proximity only facilitate new relationship construction, while other factors influence both relationship establishment and maintenance. Countries should build network facilities, expand trading partners and promote trade agreement negotiations to facilitate the development of digital service trade.

Assessing the Association Between Trade and Regional Trade Agreements: A Network Approach

Over the years, the global economy has become increasingly integrated due to globalisation, resulting in an increase in international trade flows and a complex network of trade links. The establishment of regional trade agreements (RTAs) has created an intricate network of connections and overlapping agreements among multiple members. The study traces the evolution of trade and RTA networks using tools of network analysis for the periods 1995-2021. We find that the importance of countries in the trade network has changed, with developing countries replacing the previously dominant players. China, in particular, has emerged as a key player during this period. We find that connectivity in the trade network is n ot s trongly associated w ith t he RTA network. We a lso identify t hree m ajor c ommunities w ithin t he trade network, with the United States, Germany, and Japan (later China) as the core countries in these communities. Furthermore, we compare the community structures of the trade network and the RTA network using Normalised Mutual Information. Our analysis suggests that the community structure of trade has limited overlap with the community structure of RTAs. Furthermore, correlations based on the quadratic assignment procedure indicate a weak association, if any, between the two networks over the years.

Will digital trade provisions in regional trade agreements effectively reduce CO2 emissions in member states?

This paper constructs a depth index of the regional trade agreement (RTA) digital trade terms based on text data from 2000–2021 in the TAPED database and carbon dioxide (CO2) emission data from the Eora database since 2000. We construct a gravity model between the depth index of digital trade terms and carbon CO2 emissions to analyze the impact of digital trade terms in RTAs on the CO2 emissions of member countries. The results show that the depth of digital trade clauses in RTAs significantly reduces the CO2 emissions of member countries. Still, the impact of different clause depth indexes on CO2 emissions is different on the supply and consumption sides. The results of the heterogeneity analysis based on the types of trade agreements show that the depth of RTAs has the most significant impact on the CO2 emissions among members of South–North trade agreements. The analysis of results based on industry heterogeneity shows that digital trade terms significantly impact manufacturing CO2 emissions. The article proposes that more attention be paid to the negotiation of digital trade rules in RTAs, the construction of South–North trade agreements, and the impact of digital trade on the CO2 emissions of different industries.

The Effects of Investment Treaties and Trade Agreements on FDI: The Case of Serbia

ABSTRACT This study explores the effects of Bilateral Investment Treaties (BIT) and Regional Trade Agreements (RTA) on foreign direct investment (FDI) inflows into Serbia, utilizing panel data for 2010–2021. The results indicate that both BIT and RTA independently exert positive impacts on Serbia’s inward FDI. Also, the interaction effects between BIT and RTA dummies and export/import variables on inward FDI are positive. This suggests that the implementation of BITs and/or RTAs fosters a complementary relationship between trade and FDI in Serbia as the predominant type of FDIs from partner states with which Serbia shares BITs and/or RTAs is vertical and export-platform rather than horizontal.

Industrial Policy and Regional Trade Agreements

Industrial Policy and Regional Trade Agreements

Liberalising non‐tariff measures through regional trade agreements: The impact on multinational production

AbstractModern Regional Trade Agreements (RTAs) include, among other chapters, ones concerning sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT). Drawing on recent literature highlighting the relationship between “deep” RTAs and the global organisation of production, this paper empirically investigates whether these SPS and TBT provisions affect multinational production in the food, beverages and tobacco industry. To this end, we combine two different databases to estimate, in a panel gravity framework, both the intensive and extensive margins of multinational production. Because the extensive margin of multinational production may be persistent, a dynamic probit specification is used. Our results show that legally enforceable SPS sections in RTAs, in particular, influence multinational production, though with a rather differentiated pattern in terms of intensive and extensive margins; further, the impact changes depending on the country of origin and destination.

Impact of green logistics on Vietnam's regional trade

This study investigates the impact of green logistics on Vietnam's regional trade within the frameworks of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Regional Comprehensive Economic Partnership (RCEP), Association of Southeast Asian Nations (ASEAN), and Asia-Pacific Economic Cooperation (APEC) from 2007 to 2020. Employing a newly formulated Green Logistics Performance Index (GLPI) derived through Principal Component Analysis (PCA), the research assesses how sustainable logistics practices influence trade performance. An extended gravity model is utilized to analyze the impact of green logistics across different regional trade agreements. The findings suggest that improved green logistics correlate positively with enhanced trade outcomes, highlighting the dual benefits of sustainability efforts in the environmental and economic realms. The study contributes to the limited empirical research on the intersection of green logistics and trade in Vietnam, offering a methodological approach for future analyses in this field. It provides valuable insights for businesses and policymakers aiming to align economic growth with sustainability objectives.