The “deeper” and the “wider” EU strategies of trade integration.An empirical evaluation of EU Common Commercial Policy effects

Roberta de Santis () and Claudio Vicarelli ()

No 79, ISAE Working Papers from ISAE - Institute for Studies and Economic Analyses - (Rome, ITALY)

Abstract: Since the post war period, the EU Common Commercial Policy (CCP) has moved in two directions mainly through of Preferential Trade agreements (PTAs): a “deeper” (internal) trade integration process intended to reinforce trade relations among European countries (i.e. Custom Union, Single Market, European Monetary Union, Enlargement Process), and a “wider” (external) integration process intended to reinforce trade relations with third countries.Surprisingly, there are very few empirical studies in the literature which specifically quantify the effects of “all” EU PTAs on the European countries’ trade flows. This paper seeks to fill this gap by conducting an empirical investigation on whether and how the CCP has had a significant impact on European countries’ imports. It adopts an extended version of the gravity model. In line with recent studies, it also controls for heterogeneity and bilateral trends, and includes a set of variables to proxy for the “multilateral resistance index”. According to our results, the EU “free trade area” has been a successful experiment in trade liberalisation. However, the positive and significant coefficient of PTAs signed by EU with third countries may somehow have limited the occurrence of trade diversion effects. Indeed the coefficient of trade diversion dummy is small and significant.

Keywords: trade flows; regional integration; gravity model; panel data (search for similar items in EconPapers)
JEL-codes: F13 F15 C13 C23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec and nep-int
Date: 2007-03
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Persistent link: http://EconPapers.repec.org/RePEc:isa:wpaper:79

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