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Preferential Trade Agreements Proliferation: Sorting out the Effects

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  • Sami Bensassi
  • José de Sousa
  • Joachim Jarreau

Abstract

This paper studies the implications of Preferential Trade Agreements (PTAs) proliferation. Using counterfactual estimation, we disentangle the treatment effect of one PTA on members’ trade and real income, from the externalities created by concurrent trade policy changes. Results, focusing on the MENA region between 2001 and 2007, reveal that the concurrent trade policy changes greatly weakened the trade creation effects of a PTA taken in isolation. However, countries do gain in real income from signing PTAs, even in the cases where trade creation is small; while non-members are negatively impacted. Thus, we confirm that most countries have benefited overall from tariff reductions in our period of study, but we show that this is true only because PTAs proliferate: countries offset adverse effects of non- membership, by signing new agreements with existing PTA members.

Suggested Citation

  • Sami Bensassi & José de Sousa & Joachim Jarreau, 2013. "Preferential Trade Agreements Proliferation: Sorting out the Effects," Working Papers 2013-04, CEPII research center.
  • Handle: RePEc:cii:cepidt:2013-04
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    References listed on IDEAS

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    More about this item

    Keywords

    International trade; Armington hypothesis; Counterfactual Estimation; Trade creation and diversion;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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