Investigating the Impact of Nonconventional Provisions in Regional Trade Agreements on International Trade

Author

Member of the faculty and assistant professor of economics at the Islamic Azad University of Naragh Branch

Abstract

The scope of recent regional trade agreements (RTAs) is significantly broadened by introducing several clauses, including competition policy or intellectual property rights, and expanding beyond WTO obligations.  These expanded RTAs not only reduce tariff rates, but also create cooperation and communication across a wide range of economic areas among member countries. If the existence of each clause has a significant and different effect on the level of entrepreneurship, even if it is equal in terms of tariff reduction, these differences in RTA can lead to heterogeneous effects on transactions between RTAs. Therefore, this research tries to examine the incremental impact of each RTA on transaction value in RTA countries.  To do this, 96 RTAs were assessed among 67 ESCAP member countries in a period of 40 years , and they were estimated using PPML technique along with indicators that were appropriate for each RTA, gravity equation. The results show that: a) the clause of a competitive policy has a continuous effect on trading and has the greatest impact on the expansion of transactions followed by the government procurement clause; b) also the analysis of the increase of transactions in the internal and external boundaries show significant roles in terms of competition policy and government procurement. c ) All results are strong and valid with respect to the various specimens, and show that the presence of competitive policy and government procurement are important in increasing the RTA's impact

Keywords

References

Alvarez, Ana Maria, and Laurence Wilse-Samson (2007). Implementing competition-related provisions in regional trade agreements: Is it possible to obtain development gains? UNCTAD/DITC/CLP/2006/4, United Nations Conference on Trade and Development.
Anderson, James E., and Eric van Wincoop (2003). Gravity with Gravitas: Asolution to the border puzzle. American Economic Review 93: 170-192.
Asian Development Bank (2008). How to design, negotiate, and implement a free trade agreement in Asia. Asian Development Bank.
Baier, Scott L., and Jeffry H. Bergstrand (2004). Economic determinants of free trade agreements. Journal of International Economics 64: 29-63.
Baier, Scott L., and Jeffry H. Bergstrand (2007). Do free trade agreements actually increase members’ international trade? Journal of International Economics 71: 72-95.
Baier, Scott L., Jeffry H. Bergstrand, and Michael Feng (2011). Economic integration agreements and the margins of international trade: A «distorted gravity» approach. Unpublished manuscript.
Besedes, Tibor, and Thomas Prusa (2011), The role of extensive and intensive margins and export growth. Journal of Development Economics 96: 371-379.
Brusick, Philippe, Ana Maria Alvarez, and Lucian Cernat (2005). Competition provisions in regional trade agreements: How to assure development gains. UNCTAD/DITC/CLP/2005/1, United Nations Conference on Trade and Development.
Caporale, Guglielmo, Christophe Rault, Robert Sova, and Anamaria Sova (2009). On the bilateral trade effects of free trade agreements between the EU-15 and the CEEC-4 countries. Review of World Economics 145: 189-206.
Chaney, Thomas, (2008). Distorted gravity: The intensive and extensive margins of international trade. American Economic Review 98 (4): 1707-1721.
Debaere, Peter, and Shalah Mostashari (2010), Do tariffs matter for the extensive margin of international trade? An empirical analysis. Journal of International Economics 81: 163-169.
Demidova, Svetlana, and Kala Krishna (2008). Firm heterogeneity and firm behavior with conditional policies. Economics Letters 98: 122-128.
 
Duval, Yann (2011). Trade facilitation in regional trade agreements: Recent trends in Asia and the Pacific. Working Paper Series 211, United Nations Economic and Social Commission for Asia and the Pacific.
Egger, Peter, Mario Larch, Kevin E. Staub, and Rainer Winkelmann (2011). The trade effects of endogenous preferential trade agreements. American Economic Journal 3: 113-143.
Feenstra, Robert (2002). Border effects and the gravity equation: Consistent methods for estimation. Scottish Journal of Political Economy 49: 491-506.
Felbermayr, Gabriel J., and Wilhelm Kohler (2006). Exploring the intensive and extensive margins of world trade. Review of World Economics 142: 642-674.
Flam, Harry, and Hakan Nordstrom (2011). Gravity estimation of the intensive and extensive margins of trade: An alternative procedure with alternative data. CESifo Working Paper, No. 3387.
Foster, Neil, Johannes Pِschl, and Robert Stehrer (2011). The impact of preferential trade agreements on the margins of international trade. Economic Systems 35: 84-97.
Helpman, Elhanan, Marc Melitz, and Yona Rubinstein (2008). Estimating trade flows: Trading partners and trading volumes. Quarterly Journal of Economics 123: 441-487.
Hummels, David, and Peter Klenow (2005). The variety and quality of a nation’s exports. American Economic Review 95: 704-723.
Liu, Xuepeng (2009). GATT/WTO promotes trade strongly: Sample selection and model specification. Review of International Economics 17(3): 428-446.
Medvedev, Denis (2010). Preferential trade agreements and their role in world trade. Review of World Economics 146: 199-222.
Melitz, Marc (2003). The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica 71: 1695-1725.
Roy, Jayjit (2010). Do customs union members engage in more bilateral trade than free-trade agreement members? Review of International Economics 18: 663-681.
Silva, Santos, and Silvana Tenreyro (2006). The log of gravity. Review of Economics and Statistics 88: 41-658.
Vicard, Vincent (2009). On trade creation and regional trade agreements: Does depth matter? Review of World Economics 145: 167-187.
 

Files

History

  • Receive Date: 04 November 2018
  • Revise Date: 22 January 2019
  • Accept Date: 26 January 2019

Share

How to cite

Statistics