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Third‐country Effects of Regional Trade Agreements

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  • Caroline Freund

Abstract

Does regionalism negatively impact non-members? To answer this question, we examine the effect of regional trade agreements (RTAs) on imports from non‐members and the tariffs that they face. Using data from six RTAs in Latin America and Europe, we do not find evidence that implementation of the regional agreements is associated with trade diversion from third countries to regional members. Using detailed industry data on preference margins and most‐favoured nation (MFN) tariffs for three trade agreements in Latin America over 12 years, we find that greater preference margins do not significantly reduce imports from third countries. We also look at the effect of preferences on external tariffs. We find evidence that preferential tariff reduction tends to precede the reduction of external MFN tariffs in a given sector, offering evidence of tariff complementarity. Overall, the results suggest that regionalism does not significantly harm non‐members.

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File URL: http://hdl.handle.net/10.1111/j.1467-9701.2010.01283.x
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Bibliographic Info

Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 33 (2010)
Issue (Month): 11 (November)
Pages: 1589-1605

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Handle: RePEc:bla:worlde:v:33:y:2010:i:11:p:1589-1605

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Cited by:
  1. Fugazza, Marco & Nicita, Alessandro, 2011. "Measuring preferential market access," MPRA Paper 38565, University Library of Munich, Germany.
  2. Kawai, Masahiro & Wignaraja, Ganeshan, 2011. "Asian FTAs: Trends, prospects and challenges," Journal of Asian Economics, Elsevier, vol. 22(1), pages 1-22, February.
  3. Miroudot, Sebastien & Shepherd, Ben, 2012. "The paradox of “preferences”: regional trade agreements and trade costs in services," MPRA Paper 41090, University Library of Munich, Germany.
  4. Marco Fugazza & Frédéric Robert-Nicoud, 2011. "The ‘emulator effect’ of the Uruguay round on US regionalism," Research Papers by the Department of Economics, University of Geneva 11111, Département des Sciences Économiques, Université de Genève.
  5. Ornelas, Emanuel, 2012. "Preferential trade agreements and the labour market," ILO Working Papers 469183, International Labour Organization.
  6. Sami Bensassi & José de Sousa & Joachim Jarreau, 2013. "Preferential Trade Agreements Proliferation: Sorting out the Effects," Working Papers 2013-04, CEPII research center.
  7. Marco Fugazza & Frédéric Robert-Nicoud, 2011. "The ‘Emulator Effect’ Of The Uruguay Round On United States Regionalism," UNCTAD Blue Series Papers 52, United Nations Conference on Trade and Development.

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