Table Of ContentTrade Creation and Trade
Diversion in Deep Agreements
AADITYA MATTOO, ALEN MULABDIC, MICHELE RUTA
ABCDE
Disclaimer: The views expressed in this article are
those of the authors and they do not necessarily June 2019
represent the views of the World Bank Group
Questions and motivation
• Since 1990 there has been a surge of preferential trade
agreements (PTAs).
• The nature of these agreements has been changing as well,
with PTAs covering measures beyond tariffs (“deep” PTAs).
• Key Question:
• What is the effect on the trade of members and non-members?
Deep trade agreements
Preview of main findings
• Viner revisited
• Deep agreements lead to more trade creation and less
trade diversion than shallow agreements
• Certain provisions in deep agreements have a public
good aspect – they increase trade also with non-
members
Deep trade agreements
Literature review
• Trade Creation
• Dummies (e.g. Rose (2004))
• Individual agreements (e.g. NAFTA or EU)
• Type of agreements: one-way PTAs, two-way PTAs, FTAs,
customs unions, common markets and economic unions
(Baier et al. (2014))
• Heterogeneous effects (Anderson and Yotov (2016); Baier
et al. (2015))
• Trade Diversion
• Dummies (e.g. Dai et al. (2014))
• Individual agreements (Magee (2008); Eicher et al. (2012))
• Continuous variables for trade diversion (Baldwin and
Jaimovich (2012); Fugazza and Nicita (2013))
Deep trade agreements
The changing content of PTAs
The Database: 279 Agreements
( )
http://data.worldbank.org/data-catalog/deep-trade-agreements
"WTO plus" "WTO extra"
areas covered by the WTO areas beyond the WTO
• Tariffs industrial goods • Anti-corruption • Financial assistance
• Tariffs agricultural goods • Competition policy • Health
• Customs administration • Environmental laws • Human Rights
• Export taxes • IPR • Illegal immigration
• SPS measures • Investment measures • Illicit drugs
• State trading enterprises • Labour market regulation • Industrial cooperation
• TBT measures • Movement of capital • Information society
• Countervailing measures • Consumer protection • Mining
• Anti-dumping • Data protection • Money laundering
• State aid • Approximation of legislation • Nuclear safety
• Public procurement • Agriculture • Political dialogue
• TRIMS measures • Audiovisual • Public administration
• GATS • Civil protection • Regional cooperation
• TRIPS • Innovation policies • Research and technology
• Cultural cooperation • SMEs
• Economic policy dialogue • Social Matters
• Education and training • Statistics
• Energy • Taxation
• Terrorism
• Visa and asylum
The Database: 279 Agreements
( )
http://data.worldbank.org/data-catalog/deep-trade-agreements
"WTO plus" "WTO extra"
areas covered by the WTO areas beyond the WTO
• Tariffs industrial goods • Anti-corruption • Financial assistance
• Tariffs agricultural goods • Competition policy • Health
• Customs administration • Environmental laws • Human Rights
• Export taxes • IPR • Illegal immigration
• SPS measures • Investment measures • Illicit drugs
• State trading enterprises • Labour market regulation • Industrial cooperation
• TBT measures • Movement of capital • Information society
• Countervailing measures • Consumer protection • Mining
• Anti-dumping • Data protection • Money laundering
• State aid • Approximation of legislation • Nuclear safety
• Public procurement • Agriculture • Political dialogue
• TRIMS measures • Audiovisual • Public administration
• GATS • Civil protection • Regional cooperation
• TRIPS • Innovation policies • Research and technology
• Cultural cooperation • SMEs
• Economic policy dialogue • Social Matters
• Education and training • Statistics
• Energy • Taxation
• Terrorism
• Visa and asylum
CORE (18)
The Database: 279 Agreements
( )
http://data.worldbank.org/data-catalog/deep-trade-agreements
"WTO plus" "WTO extra"
areas covered by the WTO areas beyond the WTO
• Tariffs industrial goods • Anti-corruption • Financial assistance
• Tariffs agricultural goods • Competition policy • Health
• Customs administration • Environmental laws • Human Rights
• Export taxes • IPR • Illegal immigration
• SPS measures • Investment measures • Illicit drugs
• State trading enterprises • Labour market regulation • Industrial cooperation
• TBT measures • Movement of capital • Information society
• Countervailing measures • Consumer protection • Mining
• Anti-dumping • Data protection • Money laundering
• State aid • Approximation of legislation • Nuclear safety
• Public procurement • Agriculture • Political dialogue
• TRIMS measures • Audiovisual • Public administration
• GATS • Civil protection • Regional cooperation
• TRIPS • Innovation policies • Research and technology
• Cultural cooperation • SMEs
• Economic policy dialogue • Social Matters
• Education and training • Statistics
• Energy • Taxation
• Terrorism
• Visa and asylum
CORE (18) Preferential (6)
The Database: 279 Agreements
( )
http://data.worldbank.org/data-catalog/deep-trade-agreements
"WTO plus" "WTO extra"
areas covered by the WTO areas beyond the WTO
• Tariffs industrial goods • Anti-corruption • Financial assistance
• Tariffs agricultural goods • Competition policy • Health
• Customs administration • Environmental laws • Human Rights
• Export taxes • IPR • Illegal immigration
• SPS measures • Investment measures • Illicit drugs
• State trading enterprises • Labour market regulation • Industrial cooperation
• TBT measures • Movement of capital • Information society
• Countervailing measures • Consumer protection • Mining
• Anti-dumping • Data protection • Money laundering
• State aid • Approximation of legislation • Nuclear safety
• Public procurement • Agriculture • Political dialogue
• TRIMS measures • Audiovisual • Public administration
• GATS • Civil protection • Regional cooperation
• TRIPS • Innovation policies • Research and technology
• Cultural cooperation • SMEs
• Economic policy dialogue • Social Matters
• Education and training • Statistics
• Energy • Taxation
• Terrorism
• Visa and asylum
CORE (18) Preferential (6) MFN (12)
Coding of each provision
Provision
1st COVERAGE
0 Not covered 1 Covered
2nd LEGAL
Imprecise or not Legally
ENFORCEABILITY
0 legally enforceable enforceable
language language
Dispute settlement Dispute settlement
1 2
not available available
Deep trade agreements
Description:Deep agreements lead to more trade creation and less trade diversion than shallow agreements. • Certain provisions in deep agreements have a
