Essays on Trade Agreements

Recent decades have witnessed a surge in the number of Free Trade Agreements (FTAs). This thesis studies how the approval of these agreements is affected by electoral accountability and how the rules of origin (RoO) embedded in FTAs affect firms’ sourcing decisions. In the first chapter, I combine data on legislators’ votes on FTAs with measures of their constituents’ economic interests. Contrary to influential arguments, Members of the European Parliament are more likely to support FTAs that benefit their constituencies, and alignment with constituents’ economic interests increases their probability of re-election. Similar patterns emerge for legislators in the US Congress. In the second chapter, I exploit Brexit as an exogenous trade shock and French administrative data to examine the firm-level effects of the RoO introduced by the EU-UK Trade and Cooperation Agreement (TCA). These rules reduce sourcing from non-TCA countries and decrease firms’ sales, employment, and productivity. In the third chapter, I construct product-level measures of RoO restrictiveness for South Korea’s FTAs with the European Union and the United States. I show evidence of spillovers across FTAs: differences in the restrictiveness of RoO lead to an increase in imports from the trade partner in the FTA with more restrictive RoO.