Arnoldshain Seminar XV
“The EU and Latin America Facing Globalization”
September 4 – 6, 2017
Vienna


   
Siroen, Jean-Marc, PSL Université Paris Dauphine, and Jaime Rafael Ahcar, Deep Integration. The Heterogeneity of Trade Agreements and their Impact on Bilateral Trade.
Regional trade agreements (RTAs) have emerged in an environment of stalled multilateral trade negotiations. Their impact on international trade has been well documented, while scant attention has been paid to empirical studies exploring their heterogeneity from the point of view of deep integration. We set out to determine whether deeper RTAs promote trade more effectively than less ambitious agreements. We generate credible deep integration indicators using two recently available datasets from the World Trade Organization (WTO) and the World Trade Institute (WTI-DESTA). We then test the effect of deepness on trade using a gravity model. We treat additive indicators as factor variables and use Multiple Correspondence Analysis (MCA) to obtain distilled indicators of deep integration in order to offer new insight and confirm recent deep integration findings. We find that deeper agreements increase trade more than shallow agreements, irrespective of whether the provisions they contain are within or beyond the remit of the WTO. Keywords: Deep integration, gravity model, regional trade agreements, trade liberalization, international trade. JEL: F13, F14, F15, F53