Geopolitical interests and preferential access to U.S. markets

2016

The United States imports around 25 % of its merchandise under some form of pref-erential trade agreement. This paper examines the relative impacts of these programs on the value of imports from different trading partners. We address four technical but policy-relevant issues: (1) We consider not only country eligibility in assessing impact of various programs, but also the extent of utilization of these programs, which depends on the relevant rules of origin and other compliance costs. (2) Trade preferences are granted for non-economic motivations that are correlated with variables included in gravity models. We provide new estimates that control for this potential source of se-lection bias. (3) We provide new estimates of the impact of transport and transactions costs beyond distance. (4) Finally, we control the censoring of trade flows at zero which tends to bias estimates of key coefficients in gravity models. In the standard gravity estimation, we find that beneficiaries of thes...

2011

In this paper we extend recent work using the Gravity Model to estimate the trade effects of Preferential Trading Arrangements (PTAs), by explicitly taking into account the extent of the preferential access being provided by the importer. This involves specifying a trade model, deriving an appropriate PTA variable, appending it to a gravity-type equation and estimating it. A range of PTAs are considered and allowance is made for WTO membership and GSP eligibility.

2010

The procedure to consider cross-section regressions on a yearly basis yields an impressive number of results (i.e., 18 regressions for total exports, 18 regressions for total agricultural exports and 180 regressions for products at 2-digit). We provide all these results upon request. Moreover, it is worth mentioning that, in all the cross-section regressions, specific country effects are included to account for multilateral resistance à la , the observations have been clustered at the country-pair level and, to avoid multicollinearity problems with the country effects, the GDPs and populations enter the annual regressions as products (see, for instance, Rose 2004 and 2005b).

2013

In this paper we extend recent work using the Gravity Model to estimate the trade and price effects of Preferential Trading Agreements (PTAs), by explicitly taking into account the extent of the preferential access being provided by the importer. This involves specifying a trade model, deriving appropriate PTA variables, appending them to a gravity-type equation and estimating it. We find that relying on the estimated coefficient on a PTA dummy variable overestimates the trade creating effects of PTAs. We also use average tariff and estimated trade cost data to calculate the effects of the PTAs in force in 2006 on trade flows. We show that ignoring the general equilibrium effects of PTA membership greatly distorts the distribution of outcomes.

… de Trabajo FUNCAS, 2009

The specialised literature calls preferential trade agreements (PTAs) that are drawn along continental lines natural, to distinguish them from intercontinental PTAs, which are called unnatural. The central statement of the hypothesis of "natural" trading partners is that to the extent that trade follows the natural lines dictated by proximity the formation of regional trading blocs is good. Such natural blocs are contrasted with unnatural blocs, PTAs between countries on different continents, which are less likely to be welfare improving through their impact on trade. The goal of this paper is to determine the effect on trade of continental and intercontinental PTAs. To this end, using the gravity equation we estimate trade creation and trade diversion effects of both kinds of PTAs on a sample of 182 countries over the period 1980-2007. The results indicate that trade creation forces prevail over trade diverting ones in continental PTAs whereas this is not the case for intercontinental preferential agreements.

In recent debates, trade preference erosion has been viewed by some as damaging to developing countries, and by others as insignificant, except in a few cases. But little data have been available to back either view. The objective of this paper is to improve our measures of the size, utilization, and value of all U.S. nonreciprocal trade preference programs in order to shed light on this debate. Highly disaggregated data are used to quantify the margins, coverage, utilization, and value of agricultural and nonagricultural tariff preferences for all beneficiary countries in the U.S. regional programs and in the Generalized System of Preferences. Results show that U.S. regional tariff preference programs are generally characterized by high coverage of beneficiary countries'exports, high utilization by beneficiary countries, and low tariff preference margins (except on apparel). For 29 countries, the value of U.S. tariff preferences was 5 percent or more of 2003 dutiable exports to...

The Open Economics Journal, 2010

The gravity model has been extensively used in international trade research for the last 40 years because of its considerable empirical robustness and explanatory power. Since their introduction in the 1960's, gravity models have been used for assessing trade policy implications and, particularly recently, for analyzing the effects of Free Trade Agreements on international trade. The objective of this paper is to review the recent empirical literature on gravity models, highlight best practices and provide an overview of Free Trade Agreement effects on international trade as reported by relevant gravity model-based studies over the past decade.

2010

The EU grants preferential access to its imports from developing countries under several trade agreements. The widest arrangement, in terms of country and product coverage, is the Generalised System of Preferences (GSP) through which, since 1971, virtually all developing countries have received preferential treatment when exporting to world markets. This paper evaluates the impact of GSP in enhancing developing countries' exports to EU markets. It is based on the estimation of a gravity model for a sample of 769 products exported from 169 countries to EU over the period 2001-2004. While, from an econometric point of view, the estimation methods take into account unobservable country heterogeneity as well as the potential selection bias which zero-trade values pose, the empirical setting considers an explicit measure of trade preferences, the margin of preferences. The analysis offers new empirical evidence that the impact of GSP on developing countries' agricultural exports to the EU is positive. This paper attempts to fill this gap in the literature by providing new empirical evidence of the impact of the EU GSP, the evaluation of which is based on the estimation of a gravity model using trade data at a very high level of disaggregation. With respect to the related literature on the impact of the EU GSP, the distinguishing features of the study are threefold.

2011

One of the consequences of the proliferation of preferential trade agreements is that a large share of international trade is not subject to the most favored nation tariff, but enters markets through preferential access. Preferential access affects trade because, by providing some countries with a relative advantage, it is essentially a discriminatory practice. This paper examines the extent to which preferential access have affected bilateral trade flows. The empirical approach consists first in providing two indices: one summarizing direct market access conditions (the overall tariffs faced by exports) and one measuring relative market access conditions (the overall tariffs faced by exports relative to those faced by competitors). Then, the indices are used in a gravity model in order to estimate how changes in market access conditions affect international trade. The results indicate that preferential access matters. Although direct market access conditions are more influential, the relative advantage provided by the structure of preferences affects the magnitude of bilateral trade flows. That is, bilateral trade flows depend upon the advantage provided by the system of preferences vis-à-vis other competitors.

PLOS ONE

Trade agreements are thought to raise trade integration, but existing preferential trade agreements (PTAs) are insufficient in measuring market access of products. This study develops a product-based coverage index of PTAs using the World Trade Organization (WTO) preferential trade agreements and calculates bilateral trade measures using the EORA multi-regional input-output (MRIO) tables covering 189 countries worldwide over the period 1990–2015; the structural gravity model is employed to test how PTAs affect bilateral trade. Our findings show that countries sharing a common PTA could boost the trade volume compared to those without PTAs, supporting the trade creation effect. However, the trade promotion effect of the product-based coverage index of PTAs is significant only if the member countries are low-and middle-income countries. Further, the wide range of product liberalization brought by PTAs can promote global production networks by stimulating the trade of intermediate good...