Determining Which Trade Agreement Provisions Matter for Trade

Holger Breinlich, Valentina Corradi, Nadia Rocha, Michele Ruta, J.M.C. Santos Silva and Tom Zylkin
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Holger Breinlich: University of Surrey
Valentina Corradi: NYU Abu Dhabi
Nadia Rocha: Inter American Development Bank
Michele Ruta: International Monetary Fund
J.M.C. Santos Silva: University of Surrey
Tom Zylkin: University of Richmond

No 426, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: Modern trade agreements contain a large number of provisions besides tari¤ reductions, in areas as diverse as services trade, competition policy, trade-related investment measures, or public procurement. Existing research has struggled with over…tting and severe multicollinearity when trying to estimate the e¤ects of these provisions on trade ‡ows. In this paper, we build on recent developments in the machine learning and variable selection literature to develop data-driven methods for selecting the most important provisions and quantifying their impact on trade ‡ows and apply them to a recent database with highly detailed information on the provisions included in trade agreements. We …nd that provisions related to technical barriers to trade, antidumping, competition policy, subsidies, trade facilitation, sanitary and phytosanitary measures, and export taxes are associated with enhancing the trade-increasing e¤ects of trade agreements. Interestingly, we …nd that the majority of the 305 provision variables in our data have no measurable impact on goods trade, including virtually all provisions that fall within commonly included policy areas such as services, labor markets, and public procurement.

JEL-codes: C52 C55 F14 F15 F17 (search for similar items in EconPapers)
Pages: 64 pages
Date: 2026-06
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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:0426

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