Abstract
This paper studies the impact of European regional trade agreements on European export patterns. Using a simple fixed effects estimation method, it appears that only the extensive margin is positively affected by trade agreements, while the impact on total exports and on the intensive margin is insignificant. This finding breaks down, however, if one distinguishes between individual European countries. There appears to be substantial heterogeneity across European Union member states. Moreover, the impact on the extensive margin can be explained by the inclusion of various trade-related aspects in trade agreements, which deepen the effective trade integration between the European Union and its trading partners. Finally, using a composite indicator capturing the intensity of trade integration across twelve recent European trade agreements, we cannot conclude that more comprehensive trade agreements enhance exports more.
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Notes
RTA is the general name referring to five kinds of trade agreements: Preferential Trade Agreements (PTAs), Free Trade Agreements (FTAs), Customs Unions (CUs), Common Markets and Economic Unions.
European Commission (2004). European Neighbourhood Policy: Strategy Paper. Brussels, Communication from the Commission, COM(2004) 373 final.
Table 3 in the Appendix gives an overview of all trade topics considered in this study.
The RTAs in gray in Table 2 in the Appendix are left out for the construction of the composite indicator.
The agreements the EU recently concluded with the Republic of Korea in 2011, the Eastern and Southern African states in 2012 and Central America, Peru and Colombia in 2013 were left out the analysis because the time period for these RTAs was too short to precisely analyze their trade-enhancing effects.
Note that the sum of the coefficients of the final two columns is always equal to the coefficients of the first column.
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Acknowledgements
The authors gratefully acknowledge comments on previous versions of this paper by two anonymous referees. We also thank Guido De Bruyne, Camelia Turcu, Sophie Soete and Huw Edwards for fruitful comments. Zuzanna Studnicka and Jan Van Hove benefited from financial support by FWO Flanders (Research Grant G.0365.10N).
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Studnicka, Z., Thierie, W. & Van Hove, J. The impact of regional trade agreements on European exports. Int Econ Econ Policy 16, 467–488 (2019). https://doi.org/10.1007/s10368-019-00436-3
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DOI: https://doi.org/10.1007/s10368-019-00436-3