Preferential Trade Agreements and Their Role in World Trade

The author investigates the effects of preferential trade agreements (PTAs) on bilateral trade flows using a comprehensive database of PTAs in force and a detailed matrix of world trade. He shows that total trade between PTA partners is a poor proxy for preferential trade (trade in tariff lines wher...

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description The author investigates the effects of preferential trade agreements (PTAs) on bilateral trade flows using a comprehensive database of PTAs in force and a detailed matrix of world trade. He shows that total trade between PTA partners is a poor proxy for preferential trade (trade in tariff lines where preferences are likely to matter): while the former amounted to one-third of global trade in 2000-02, the latter was between one-sixth and one-tenth of world trade. His gravity model estimates indicate that using total rather than preferential trade to assess the impact of PTAs leads to a significant downward bias in the PTA coefficient. The author finds that product exclusions and long phase-in periods significantly limit preferential trade, and their removal could more than double trade in tariff lines above 3 percent of most-favored-nation (MFN) duties. He also shows that the effects of PTAs on trade vary by type of agreement and are increasing in the incomes of PTA partners.
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He shows that total trade between PTA partners is a poor proxy for preferential trade (trade in tariff lines where preferences are likely to matter): while the former amounted to one-third of global trade in 2000-02, the latter was between one-sixth and one-tenth of world trade. His gravity model estimates indicate that using total rather than preferential trade to assess the impact of PTAs leads to a significant downward bias in the PTA coefficient. The author finds that product exclusions and long phase-in periods significantly limit preferential trade, and their removal could more than double trade in tariff lines above 3 percent of most-favored-nation (MFN) duties. He also shows that the effects of PTAs on trade vary by type of agreement and are increasing in the incomes of PTA partners.</description><language>eng</language><publisher>World Bank, Washington, DC</publisher><subject>AD VALOREM ; AGREEMENT ON TRADE ; ANDEAN PACT ; ANTI-DUMPING DUTY ; BASE YEAR ; BILATERAL AGREEMENTS ; BILATERAL TRADE ; CENTRAL AMERICAN ; CHANGES IN TRADE ; COMMON MARKET ; COMPETITION POLICIES ; CONCESSIONS ; CONSUMER PREFERENCES ; CURRENCY ; CURRENCY UNION ; CURRENCY UNIONS ; CUSTOMS ; CUSTOMS PROCEDURES ; CUSTOMS UNION ; CUSTOMS UNIONS ; DATE OF ENTRY INTO FORCE ; DEVELOPING REGIONS ; DUMPING ; ECONOMIC COOPERATION ; ECONOMIC RELATIONS ; ELASTICITY ; EUROPEAN UNION ; EXCHANGE RATE ; EXPORT DIVERSION ; EXPORT PRODUCTS ; EXPORTS ; EXTERNAL PROTECTION ; EXTERNAL TARIFF ; FREE TRADE ; FREE TRADE AGREEMENT ; FREE TRADE AREA ; FREE TRADE AREAS ; FUNCTIONAL FORMS ; GATS ; GDP ; GDP PER CAPITA ; GENERAL AGREEMENT ON TRADE IN SERVICES ; GENERAL SYSTEM OF PREFERENCES ; GLOBAL FREE TRADE ; GLOBAL LEVEL ; GLOBAL TRADE ; GLOBAL TRADING ; GRAVITY APPROACH ; GRAVITY EQUATION ; GRAVITY ESTIMATES ; GRAVITY FRAMEWORK ; GRAVITY MODEL ; GRAVITY MODELS ; IMPORT DATA ; IMPORTED GOODS ; IMPORTS ; INCOME ; INCOME ELASTICITIES ; INCOME GROUPS ; INTEGRATION AGREEMENTS ; INTERNATIONAL TRADE ; LATIN AMERICAN ; MARKET ACCESS ; MARKET STRUCTURE ; MERCHANDISE TRADE FLOWS ; MFN ; MOST FAVORED NATION ; MULTILATERAL TARIFFS ; MULTIPLE AGREEMENTS ; MUTUAL RECOGNITION ; MUTUAL RECOGNITION OF STANDARDS ; POLICY RESEARCH ; POTENTIAL BENEFITS ; PREFERENTIAL AGREEMENT ; PREFERENTIAL AGREEMENTS ; PREFERENTIAL BASIS ; PREFERENTIAL IMPORTS ; PREFERENTIAL LIBERALIZATION ; PREFERENTIAL RATES ; PREFERENTIAL REGIME ; PREFERENTIAL SCHEME ; PREFERENTIAL TRADE ; PREFERENTIAL TRADE AGREEMENTS ; RECIPROCITY ; REGIONAL TRADE ; RULES OF ORIGIN ; SPECIFIC COMMITMENTS ; SUB-SAHARAN AFRICA ; SYSTEM OF PREFERENCES ; TARIFF DATA ; TARIFF LINE ; TARIFF LINES ; TARIFF REDUCTION ; TARIFF REGIMES ; TARIFF SCHEDULES ; TARIFF STRUCTURE ; TRADE AGREEMENT ; TRADE BARRIERS ; TRADE COMMISSION ; TRADE COSTS ; TRADE CREATION ; TRADE DIVERSION ; TRADE FLOW ; TRADE FLOW DATA ; TRADE FLOWS ; TRADE IN GOODS ; TRADE LIBERALIZATION ; TRADE POLICY ; TRADE POLICY AGENDA ; TRADE STRUCTURE ; TRADE VARIABLES ; TRADE VOLUMES ; TRADING PARTNERS ; TRADING SYSTEM ; TREATMENT ; UNILATERAL PREFERENCES ; VALUE OF TRADE ; WORLD TRADE ; WORLD TRADE ORGANIZATION ; WTO</subject><creationdate>2006</creationdate><rights>CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank</rights><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><relation>Policy Research Working Paper</relation></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>307,776,780,783,18962</link.rule.ids><linktorsrc>$$Uhttps://hdl.handle.net/10986/9012$$EView_record_in_World_Bank$$FView_record_in_$$GWorld_Bank$$Hfree_for_read</linktorsrc></links><search><creatorcontrib>Medvedev, Denis</creatorcontrib><title>Preferential Trade Agreements and Their Role in World Trade</title><description>The author investigates the effects of preferential trade agreements (PTAs) on bilateral trade flows using a comprehensive database of PTAs in force and a detailed matrix of world trade. 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He also shows that the effects of PTAs on trade vary by type of agreement and are increasing in the incomes of PTA partners.</description><subject>AD VALOREM</subject><subject>AGREEMENT ON TRADE</subject><subject>ANDEAN PACT</subject><subject>ANTI-DUMPING DUTY</subject><subject>BASE YEAR</subject><subject>BILATERAL AGREEMENTS</subject><subject>BILATERAL TRADE</subject><subject>CENTRAL AMERICAN</subject><subject>CHANGES IN TRADE</subject><subject>COMMON MARKET</subject><subject>COMPETITION POLICIES</subject><subject>CONCESSIONS</subject><subject>CONSUMER PREFERENCES</subject><subject>CURRENCY</subject><subject>CURRENCY UNION</subject><subject>CURRENCY UNIONS</subject><subject>CUSTOMS</subject><subject>CUSTOMS PROCEDURES</subject><subject>CUSTOMS UNION</subject><subject>CUSTOMS UNIONS</subject><subject>DATE OF ENTRY INTO FORCE</subject><subject>DEVELOPING REGIONS</subject><subject>DUMPING</subject><subject>ECONOMIC COOPERATION</subject><subject>ECONOMIC RELATIONS</subject><subject>ELASTICITY</subject><subject>EUROPEAN UNION</subject><subject>EXCHANGE RATE</subject><subject>EXPORT DIVERSION</subject><subject>EXPORT PRODUCTS</subject><subject>EXPORTS</subject><subject>EXTERNAL PROTECTION</subject><subject>EXTERNAL TARIFF</subject><subject>FREE TRADE</subject><subject>FREE TRADE AGREEMENT</subject><subject>FREE TRADE AREA</subject><subject>FREE TRADE AREAS</subject><subject>FUNCTIONAL FORMS</subject><subject>GATS</subject><subject>GDP</subject><subject>GDP PER CAPITA</subject><subject>GENERAL AGREEMENT ON TRADE IN SERVICES</subject><subject>GENERAL SYSTEM OF PREFERENCES</subject><subject>GLOBAL FREE TRADE</subject><subject>GLOBAL LEVEL</subject><subject>GLOBAL TRADE</subject><subject>GLOBAL TRADING</subject><subject>GRAVITY APPROACH</subject><subject>GRAVITY EQUATION</subject><subject>GRAVITY ESTIMATES</subject><subject>GRAVITY FRAMEWORK</subject><subject>GRAVITY MODEL</subject><subject>GRAVITY MODELS</subject><subject>IMPORT DATA</subject><subject>IMPORTED GOODS</subject><subject>IMPORTS</subject><subject>INCOME</subject><subject>INCOME ELASTICITIES</subject><subject>INCOME GROUPS</subject><subject>INTEGRATION AGREEMENTS</subject><subject>INTERNATIONAL TRADE</subject><subject>LATIN AMERICAN</subject><subject>MARKET ACCESS</subject><subject>MARKET STRUCTURE</subject><subject>MERCHANDISE TRADE FLOWS</subject><subject>MFN</subject><subject>MOST FAVORED NATION</subject><subject>MULTILATERAL TARIFFS</subject><subject>MULTIPLE AGREEMENTS</subject><subject>MUTUAL RECOGNITION</subject><subject>MUTUAL RECOGNITION OF STANDARDS</subject><subject>POLICY RESEARCH</subject><subject>POTENTIAL BENEFITS</subject><subject>PREFERENTIAL AGREEMENT</subject><subject>PREFERENTIAL AGREEMENTS</subject><subject>PREFERENTIAL BASIS</subject><subject>PREFERENTIAL IMPORTS</subject><subject>PREFERENTIAL LIBERALIZATION</subject><subject>PREFERENTIAL RATES</subject><subject>PREFERENTIAL REGIME</subject><subject>PREFERENTIAL SCHEME</subject><subject>PREFERENTIAL TRADE</subject><subject>PREFERENTIAL TRADE AGREEMENTS</subject><subject>RECIPROCITY</subject><subject>REGIONAL TRADE</subject><subject>RULES OF ORIGIN</subject><subject>SPECIFIC COMMITMENTS</subject><subject>SUB-SAHARAN AFRICA</subject><subject>SYSTEM OF PREFERENCES</subject><subject>TARIFF DATA</subject><subject>TARIFF LINE</subject><subject>TARIFF LINES</subject><subject>TARIFF REDUCTION</subject><subject>TARIFF REGIMES</subject><subject>TARIFF SCHEDULES</subject><subject>TARIFF STRUCTURE</subject><subject>TRADE AGREEMENT</subject><subject>TRADE BARRIERS</subject><subject>TRADE COMMISSION</subject><subject>TRADE COSTS</subject><subject>TRADE CREATION</subject><subject>TRADE DIVERSION</subject><subject>TRADE FLOW</subject><subject>TRADE FLOW DATA</subject><subject>TRADE FLOWS</subject><subject>TRADE IN GOODS</subject><subject>TRADE LIBERALIZATION</subject><subject>TRADE POLICY</subject><subject>TRADE POLICY AGENDA</subject><subject>TRADE STRUCTURE</subject><subject>TRADE VARIABLES</subject><subject>TRADE VOLUMES</subject><subject>TRADING PARTNERS</subject><subject>TRADING SYSTEM</subject><subject>TREATMENT</subject><subject>UNILATERAL PREFERENCES</subject><subject>VALUE OF TRADE</subject><subject>WORLD TRADE</subject><subject>WORLD TRADE ORGANIZATION</subject><subject>WTO</subject><fulltext>true</fulltext><rsrctype>book</rsrctype><creationdate>2006</creationdate><recordtype>book</recordtype><sourceid>VO9</sourceid><recordid>eNrjZLAOKEpNSy1KzSvJTMxRCClKTElVcEwvSk3NBQoVKyTmpSiEZKRmFikE5eekKmTmKYTnF-WkQBTyMLCmJeYUp_JCaW4GYzfXEGcP3XKQmqTEvOz4_ILUvOy8_PKc1JR0oC0F-cWZJflFlfGGBpYWZvGWBoZGxuTpAgDxZT8I</recordid><startdate>200610</startdate><enddate>200610</enddate><creator>Medvedev, Denis</creator><general>World Bank, Washington, DC</general><scope>VO9</scope></search><sort><creationdate>200610</creationdate><title>Preferential Trade Agreements and Their Role in World Trade</title><author>Medvedev, Denis</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-worldbank_openknowledgerepository_10986_90123</frbrgroupid><rsrctype>books</rsrctype><prefilter>books</prefilter><language>eng</language><creationdate>2006</creationdate><topic>AD VALOREM</topic><topic>AGREEMENT ON TRADE</topic><topic>ANDEAN PACT</topic><topic>ANTI-DUMPING DUTY</topic><topic>BASE YEAR</topic><topic>BILATERAL AGREEMENTS</topic><topic>BILATERAL TRADE</topic><topic>CENTRAL AMERICAN</topic><topic>CHANGES IN TRADE</topic><topic>COMMON MARKET</topic><topic>COMPETITION POLICIES</topic><topic>CONCESSIONS</topic><topic>CONSUMER PREFERENCES</topic><topic>CURRENCY</topic><topic>CURRENCY UNION</topic><topic>CURRENCY UNIONS</topic><topic>CUSTOMS</topic><topic>CUSTOMS PROCEDURES</topic><topic>CUSTOMS UNION</topic><topic>CUSTOMS UNIONS</topic><topic>DATE OF ENTRY INTO FORCE</topic><topic>DEVELOPING REGIONS</topic><topic>DUMPING</topic><topic>ECONOMIC COOPERATION</topic><topic>ECONOMIC RELATIONS</topic><topic>ELASTICITY</topic><topic>EUROPEAN UNION</topic><topic>EXCHANGE RATE</topic><topic>EXPORT DIVERSION</topic><topic>EXPORT PRODUCTS</topic><topic>EXPORTS</topic><topic>EXTERNAL PROTECTION</topic><topic>EXTERNAL TARIFF</topic><topic>FREE TRADE</topic><topic>FREE TRADE AGREEMENT</topic><topic>FREE TRADE AREA</topic><topic>FREE TRADE AREAS</topic><topic>FUNCTIONAL FORMS</topic><topic>GATS</topic><topic>GDP</topic><topic>GDP PER CAPITA</topic><topic>GENERAL AGREEMENT ON TRADE IN SERVICES</topic><topic>GENERAL SYSTEM OF PREFERENCES</topic><topic>GLOBAL FREE TRADE</topic><topic>GLOBAL LEVEL</topic><topic>GLOBAL TRADE</topic><topic>GLOBAL TRADING</topic><topic>GRAVITY APPROACH</topic><topic>GRAVITY EQUATION</topic><topic>GRAVITY ESTIMATES</topic><topic>GRAVITY FRAMEWORK</topic><topic>GRAVITY MODEL</topic><topic>GRAVITY MODELS</topic><topic>IMPORT DATA</topic><topic>IMPORTED GOODS</topic><topic>IMPORTS</topic><topic>INCOME</topic><topic>INCOME ELASTICITIES</topic><topic>INCOME GROUPS</topic><topic>INTEGRATION AGREEMENTS</topic><topic>INTERNATIONAL TRADE</topic><topic>LATIN AMERICAN</topic><topic>MARKET ACCESS</topic><topic>MARKET STRUCTURE</topic><topic>MERCHANDISE TRADE FLOWS</topic><topic>MFN</topic><topic>MOST FAVORED NATION</topic><topic>MULTILATERAL TARIFFS</topic><topic>MULTIPLE AGREEMENTS</topic><topic>MUTUAL RECOGNITION</topic><topic>MUTUAL RECOGNITION OF STANDARDS</topic><topic>POLICY RESEARCH</topic><topic>POTENTIAL BENEFITS</topic><topic>PREFERENTIAL AGREEMENT</topic><topic>PREFERENTIAL AGREEMENTS</topic><topic>PREFERENTIAL BASIS</topic><topic>PREFERENTIAL IMPORTS</topic><topic>PREFERENTIAL LIBERALIZATION</topic><topic>PREFERENTIAL RATES</topic><topic>PREFERENTIAL REGIME</topic><topic>PREFERENTIAL SCHEME</topic><topic>PREFERENTIAL TRADE</topic><topic>PREFERENTIAL TRADE AGREEMENTS</topic><topic>RECIPROCITY</topic><topic>REGIONAL TRADE</topic><topic>RULES OF ORIGIN</topic><topic>SPECIFIC COMMITMENTS</topic><topic>SUB-SAHARAN AFRICA</topic><topic>SYSTEM OF PREFERENCES</topic><topic>TARIFF DATA</topic><topic>TARIFF LINE</topic><topic>TARIFF LINES</topic><topic>TARIFF REDUCTION</topic><topic>TARIFF REGIMES</topic><topic>TARIFF SCHEDULES</topic><topic>TARIFF STRUCTURE</topic><topic>TRADE AGREEMENT</topic><topic>TRADE BARRIERS</topic><topic>TRADE COMMISSION</topic><topic>TRADE COSTS</topic><topic>TRADE CREATION</topic><topic>TRADE DIVERSION</topic><topic>TRADE FLOW</topic><topic>TRADE FLOW DATA</topic><topic>TRADE FLOWS</topic><topic>TRADE IN GOODS</topic><topic>TRADE LIBERALIZATION</topic><topic>TRADE POLICY</topic><topic>TRADE POLICY AGENDA</topic><topic>TRADE STRUCTURE</topic><topic>TRADE VARIABLES</topic><topic>TRADE VOLUMES</topic><topic>TRADING PARTNERS</topic><topic>TRADING SYSTEM</topic><topic>TREATMENT</topic><topic>UNILATERAL PREFERENCES</topic><topic>VALUE OF TRADE</topic><topic>WORLD TRADE</topic><topic>WORLD TRADE ORGANIZATION</topic><topic>WTO</topic><toplevel>online_resources</toplevel><creatorcontrib>Medvedev, Denis</creatorcontrib><collection>Open Knowledge Repository</collection></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext_linktorsrc</fulltext></delivery><addata><au>Medvedev, Denis</au><format>book</format><genre>book</genre><ristype>BOOK</ristype><btitle>Preferential Trade Agreements and Their Role in World Trade</btitle><seriestitle>Policy Research Working Paper</seriestitle><date>2006-10</date><risdate>2006</risdate><volume>4038</volume><abstract>The author investigates the effects of preferential trade agreements (PTAs) on bilateral trade flows using a comprehensive database of PTAs in force and a detailed matrix of world trade. He shows that total trade between PTA partners is a poor proxy for preferential trade (trade in tariff lines where preferences are likely to matter): while the former amounted to one-third of global trade in 2000-02, the latter was between one-sixth and one-tenth of world trade. His gravity model estimates indicate that using total rather than preferential trade to assess the impact of PTAs leads to a significant downward bias in the PTA coefficient. The author finds that product exclusions and long phase-in periods significantly limit preferential trade, and their removal could more than double trade in tariff lines above 3 percent of most-favored-nation (MFN) duties. He also shows that the effects of PTAs on trade vary by type of agreement and are increasing in the incomes of PTA partners.</abstract><pub>World Bank, Washington, DC</pub><oa>free_for_read</oa></addata></record>
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subjects AD VALOREM
AGREEMENT ON TRADE
ANDEAN PACT
ANTI-DUMPING DUTY
BASE YEAR
BILATERAL AGREEMENTS
BILATERAL TRADE
CENTRAL AMERICAN
CHANGES IN TRADE
COMMON MARKET
COMPETITION POLICIES
CONCESSIONS
CONSUMER PREFERENCES
CURRENCY
CURRENCY UNION
CURRENCY UNIONS
CUSTOMS
CUSTOMS PROCEDURES
CUSTOMS UNION
CUSTOMS UNIONS
DATE OF ENTRY INTO FORCE
DEVELOPING REGIONS
DUMPING
ECONOMIC COOPERATION
ECONOMIC RELATIONS
ELASTICITY
EUROPEAN UNION
EXCHANGE RATE
EXPORT DIVERSION
EXPORT PRODUCTS
EXPORTS
EXTERNAL PROTECTION
EXTERNAL TARIFF
FREE TRADE
FREE TRADE AGREEMENT
FREE TRADE AREA
FREE TRADE AREAS
FUNCTIONAL FORMS
GATS
GDP
GDP PER CAPITA
GENERAL AGREEMENT ON TRADE IN SERVICES
GENERAL SYSTEM OF PREFERENCES
GLOBAL FREE TRADE
GLOBAL LEVEL
GLOBAL TRADE
GLOBAL TRADING
GRAVITY APPROACH
GRAVITY EQUATION
GRAVITY ESTIMATES
GRAVITY FRAMEWORK
GRAVITY MODEL
GRAVITY MODELS
IMPORT DATA
IMPORTED GOODS
IMPORTS
INCOME
INCOME ELASTICITIES
INCOME GROUPS
INTEGRATION AGREEMENTS
INTERNATIONAL TRADE
LATIN AMERICAN
MARKET ACCESS
MARKET STRUCTURE
MERCHANDISE TRADE FLOWS
MFN
MOST FAVORED NATION
MULTILATERAL TARIFFS
MULTIPLE AGREEMENTS
MUTUAL RECOGNITION
MUTUAL RECOGNITION OF STANDARDS
POLICY RESEARCH
POTENTIAL BENEFITS
PREFERENTIAL AGREEMENT
PREFERENTIAL AGREEMENTS
PREFERENTIAL BASIS
PREFERENTIAL IMPORTS
PREFERENTIAL LIBERALIZATION
PREFERENTIAL RATES
PREFERENTIAL REGIME
PREFERENTIAL SCHEME
PREFERENTIAL TRADE
PREFERENTIAL TRADE AGREEMENTS
RECIPROCITY
REGIONAL TRADE
RULES OF ORIGIN
SPECIFIC COMMITMENTS
SUB-SAHARAN AFRICA
SYSTEM OF PREFERENCES
TARIFF DATA
TARIFF LINE
TARIFF LINES
TARIFF REDUCTION
TARIFF REGIMES
TARIFF SCHEDULES
TARIFF STRUCTURE
TRADE AGREEMENT
TRADE BARRIERS
TRADE COMMISSION
TRADE COSTS
TRADE CREATION
TRADE DIVERSION
TRADE FLOW
TRADE FLOW DATA
TRADE FLOWS
TRADE IN GOODS
TRADE LIBERALIZATION
TRADE POLICY
TRADE POLICY AGENDA
TRADE STRUCTURE
TRADE VARIABLES
TRADE VOLUMES
TRADING PARTNERS
TRADING SYSTEM
TREATMENT
UNILATERAL PREFERENCES
VALUE OF TRADE
WORLD TRADE
WORLD TRADE ORGANIZATION
WTO
title Preferential Trade Agreements and Their Role in World Trade
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