Preferential Trade Agreements and Their Role in World Trade

The author investigates the effects of preferential trade agreements (PTAs) on bilateral trade flows using a comprehensive database of PTAs in force and a detailed matrix of world trade. He shows that total trade between PTA partners is a poor proxy for preferential trade (trade in tariff lines where preferences are likely to matter): while the former amounted to one-third of global trade in 2000-02, the latter was between one-sixth and one-tenth of world trade. His gravity model estimates indicate that using total rather than preferential trade to assess the impact of PTAs leads to a significant downward bias in the PTA coefficient. The author finds that product exclusions and long phase-in periods significantly limit preferential trade, and their removal could more than double trade in tariff lines above 3 percent of most-favored-nation (MFN) duties. He also shows that the effects of PTAs on trade vary by type of agreement and are increasing in the incomes of PTA partners.

Bibliographic Details

Main Author:	Medvedev, Denis
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2006-10
Subjects:	AD VALOREM, AGREEMENT ON TRADE, ANDEAN PACT, ANTI-DUMPING DUTY, BASE YEAR, BILATERAL AGREEMENTS, BILATERAL TRADE, CENTRAL AMERICAN, CHANGES IN TRADE, COMMON MARKET, COMPETITION POLICIES, CONCESSIONS, CONSUMER PREFERENCES, CURRENCY, CURRENCY UNION, CURRENCY UNIONS, CUSTOMS, CUSTOMS PROCEDURES, CUSTOMS UNION, CUSTOMS UNIONS, DATE OF ENTRY INTO FORCE, DEVELOPING REGIONS, DUMPING, ECONOMIC COOPERATION, ECONOMIC RELATIONS, ELASTICITY, EUROPEAN UNION, EXCHANGE RATE, EXPORT DIVERSION, EXPORT PRODUCTS, EXPORTS, EXTERNAL PROTECTION, EXTERNAL TARIFF, FREE TRADE, FREE TRADE AGREEMENT, FREE TRADE AREA, FREE TRADE AREAS, FUNCTIONAL FORMS, GATS, GDP, GDP PER CAPITA, GENERAL AGREEMENT ON TRADE IN SERVICES, GENERAL SYSTEM OF PREFERENCES, GLOBAL FREE TRADE, GLOBAL LEVEL, GLOBAL TRADE, GLOBAL TRADING, GRAVITY APPROACH, GRAVITY EQUATION, GRAVITY ESTIMATES, GRAVITY FRAMEWORK, GRAVITY MODEL, GRAVITY MODELS, IMPORT DATA, IMPORTED GOODS, IMPORTS, INCOME, INCOME ELASTICITIES, INCOME GROUPS, INTEGRATION AGREEMENTS, INTERNATIONAL TRADE, LATIN AMERICAN, MARKET ACCESS, MARKET STRUCTURE, MERCHANDISE TRADE FLOWS, MFN, MOST FAVORED NATION, MULTILATERAL TARIFFS, MULTIPLE AGREEMENTS, MUTUAL RECOGNITION, MUTUAL RECOGNITION OF STANDARDS, POLICY RESEARCH, POTENTIAL BENEFITS, PREFERENTIAL AGREEMENT, PREFERENTIAL AGREEMENTS, PREFERENTIAL BASIS, PREFERENTIAL IMPORTS, PREFERENTIAL LIBERALIZATION, PREFERENTIAL RATES, PREFERENTIAL REGIME, PREFERENTIAL SCHEME, PREFERENTIAL TRADE, PREFERENTIAL TRADE AGREEMENTS, RECIPROCITY, REGIONAL TRADE, RULES OF ORIGIN, SPECIFIC COMMITMENTS, SUB-SAHARAN AFRICA, SYSTEM OF PREFERENCES, TARIFF DATA, TARIFF LINE, TARIFF LINES, TARIFF REDUCTION, TARIFF REGIMES, TARIFF SCHEDULES, TARIFF STRUCTURE, TRADE AGREEMENT, TRADE BARRIERS, TRADE COMMISSION, TRADE COSTS, TRADE CREATION, TRADE DIVERSION, TRADE FLOW, TRADE FLOW DATA, TRADE FLOWS, TRADE IN GOODS, TRADE LIBERALIZATION, TRADE POLICY, TRADE POLICY AGENDA, TRADE STRUCTURE, TRADE VARIABLES, TRADE VOLUMES, TRADING PARTNERS, TRADING SYSTEM, TREATMENT, UNILATERAL PREFERENCES, VALUE OF TRADE, WORLD TRADE, WORLD TRADE ORGANIZATION, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2006/10/7129768/preferential-trade-agreements-role-world-trade http://hdl.handle.net/10986/9012
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