Does the depth of trade agreements matter for trade in services?

Amelie Guillin, Isabelle Rabaud () and Chahir Zaki
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Amelie Guillin: ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - Université Gustave Eiffel

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Abstract: Abstract In recent years, deep trade agreements have spread around the world and gone beyond tariff reductions. We aim to test whether the depth of agreements fosters trade in services. To do so, we use a structural gravity‐type model and build new indicators of the depth of agreements based on the number of articles that are legally enforceable and that are related to trade in services. We show that, while only the deepest trade agreements raise trade in services, the quality of institution determines how deep agreements affect both the intensive (measured by the quantity of trade) and extensive margins of trade (measured by the number of service products exported and the share of the most exported service product in total services exports). This result is more pronounced for some service provisions and is robust after we control for the endogeneity of deep trade agreements. Finally, our results also hold for the Middle East and North Africa countries that we examine as an example of an emerging region that has a comparative advantage in services but whose most of the trade agreements are rather shallow.

Date: 2023-09-23
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Published in The World Economy, 2023, 46 (12), pp.3616-3653. ⟨10.1111/twec.13478⟩

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Related works:
Journal Article: Does the depth of trade agreements matter for trade in services? (2023)
Working Paper: Does the Depth of Trade Agreements Matter for Trade in Services? (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04362476

DOI: 10.1111/twec.13478

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