Working Paper: CEPR ID: DP12795
Authors: Swati Dhingra; Rebecca Freeman; Eleonora Mavroeidi
Abstract: There is a growing recognition that for developed economies, like the UK, tariff-free market access is just one of a number of measures that ease cross-border trade flows. Modern trade agreements go beyond tariff reductions by setting rules, such as market access and regulation of foreign service providers. We examine the contribution of deep non-tariff provisions on international trade in goods and services. Using a gravity model, we find that provisions related to services, investment, and competition make up half of the overall impact of economic integration agreements on trade flows. These deep provisions have larger effects for trade in servicesthan for trade in goods, and their relative contribution is highest in sectors that facilitate supply chain activity, such as transportation and storage. We apply our sectoral estimates of deep provisions to examine two counterfactuals of the UK signing bilateral deals with the US and with China and India. We find that negotiating services, investment, and competition provisions in these future deals would boost trade relatively more in professional, scientific, and technical activities in the UK.
Keywords: trade agreements; integration agreements; EIAs; trade policy; deep provisions; non-tariff barriers
JEL Codes: F10; F13; F14; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| deep provisions in trade agreements (F13) | trade flows (F10) |
| services, investment, and competition provisions (F13) | trade flows (F10) |
| deep provisions in trade agreements (F13) | trade in professional, scientific, and technical activities (L84) |
| deep provisions in trade agreements (F13) | trade in goods (F10) |