Preferential Trade Agreements and Non-tariff Measures

David Kuenzel and Rishi Sharma

No 2025-001, Wesleyan Economics Working Papers from Wesleyan University, Department of Economics

Abstract: We study the product-level effects of Preferential Trade Agreements (PTAs) on the implementation of non-tariff measures (NTMs) using a global database spanning the 2000-2017 period. Employing an instrumental variable strategy, we provide evidence that an increase in the import share of PTA partners leads to a reduction in the application of NTMs. Exploring several mechanisms, we find that these effects are driven by products with higher preferential margins, the gap between MFN and preferential tariff rates. This result is consistent with what we call a “rent preservation effect,” whereby PTA partner countries push to limit the imposition of NTMs in order to preserve their preferential rents. Importantly, higher PTA import shares contribute to multilateral liberalization by lowering both the usage of NTMs against PTA members and non-PTA partners.

Keywords: Trade Agreements; Non-tariff Measures (search for similar items in EconPapers)
JEL-codes: F13 F14 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2025-01
New Economics Papers: this item is included in nep-int
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