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The “deeper” and the “wider” EU strategies of trade integration.An empirical evaluation of EU Common Commercial Policy effects

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Author Info

  • Roberta De Santis

    (ISAE - Institute for Studies and Economic Analyses)

  • Claudio Vicarelli

    (ISAE - Institute for Studies and Economic Analyses)

Abstract

Since the post war period, the EU Common Commercial Policy (CCP) has moved in two directions mainly through of Preferential Trade agreements (PTAs): a “deeper” (internal) trade integration process intended to reinforce trade relations among European countries (i.e. Custom Union, Single Market, European Monetary Union, Enlargement Process), and a “wider” (external) integration process intended to reinforce trade relations with third countries.Surprisingly, there are very few empirical studies in the literature which specifically quantify the effects of “all” EU PTAs on the European countries’ trade flows. This paper seeks to fill this gap by conducting an empirical investigation on whether and how the CCP has had a significant impact on European countries’ imports. It adopts an extended version of the gravity model. In line with recent studies, it also controls for heterogeneity and bilateral trends, and includes a set of variables to proxy for the “multilateral resistance index”. According to our results, the EU “free trade area” has been a successful experiment in trade liberalisation. However, the positive and significant coefficient of PTAs signed by EU with third countries may somehow have limited the occurrence of trade diversion effects. Indeed the coefficient of trade diversion dummy is small and significant.

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Bibliographic Info

Paper provided by ISTAT - Italian National Institute of Statistics - (Rome, ITALY) in its series ISAE Working Papers with number 79.

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Length: 30 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:isa:wpaper:79

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Keywords: trade flows; regional integration; gravity model; panel data;

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References

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  1. Luca De Benedictis & Roberta De Santis & Claudio Vicarelli, 2005. "Hub-and-Spoke or else? Free trade agreements in the “enlarged” European Union," ISAE Working Papers 52, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  2. Antonis Adam & James McHugh & Theodora Kosma, 2003. "Trade Liberalization Strategies," IMF Working Papers 03/239, International Monetary Fund.
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  9. James E. Anderson & Eric van Wincoop, 2000. "Gravity with Gravitas: A Solution to the Border Puzzle," Boston College Working Papers in Economics 485, Boston College Department of Economics.
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  11. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D., 2003. "Augmented gravity model: An empirical application to Mercosur- European trade flows," International Trade 0309019, EconWPA.
  12. Andrew K. Rose, 2002. "Do We Really KNow that the WTO Increases Trade?," Working Papers 182002, Hong Kong Institute for Monetary Research.
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Cited by:
  1. de santis, roberta, 2011. "Impact of environmental regulations on trade in the main EU countries: conflict or synergy?," MPRA Paper 37756, University Library of Munich, Germany.
  2. Jeevika Weerahewa, 2009. "Impact of Trade Facilitation Measures and Regional Trade Agreements on Food and Agricultural Tarde in South Asia," Working Papers 6909, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..

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