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Effects of a Deeper Central European Free Trade Agreement

Author

Listed:
  • Alen Mulabdic
  • Michele Ruta

Abstract

This paper studies the economic effects of ‘deepening’ the Central European Free Trade Agreement (CEFTA). It combines new information on the content of trade agreements with gravity model estimates of the impact of deep trade agreements, agreements that go beyond the elimination of tariffs and other border restrictions. The analysis suggests that CEFTA is a relatively shallow trade agreement as it covers mostly policy areas under the current WTO mandate. The estimated trade impacts of CEFTA on member countries are relatively modest, varying between 0.02 and 7.4 percent. CEFTA’s members would gain from simultaneously deepening their integration reciprocally and vis-a-vis the EU. In particular, a trade agreement with the EU similar to the EU-Norway agreement could increase total exports by CEFTA members between 4 and 27 percent.

Suggested Citation

  • Alen Mulabdic & Michele Ruta, 2018. "Effects of a Deeper Central European Free Trade Agreement," World Bank Publications - Books, The World Bank Group, number 37138, August.
    • Handle: RePEc:wbk:wbpubs:37138
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    References listed on IDEAS

    as
    1. Aaditya Mattoo & Alen Mulabdic & Michele Ruta, 2022. "Trade creation and trade diversion in deep agreements," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(3), pages 1598-1637, August.
    2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    3. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
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