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On the Trade-diversion Effects of Free Trade Agreements

Mian Dai, Yoto Yotov and Thomas Zylkin ()

No 2013-3, School of Economics Working Paper Series from LeBow College of Business, Drexel University

Abstract: Standard trade theory suggests that Free Trade Agreements (FTAs) could disrupt trade between members and non-members. However, the trade diversion effects of FTAs have not been thoroughly examined empirically. Using a novel empirical approach, we confirm that FTAs that entered into force during the 1990s diverted trade away from non-member countries. Interestingly, we find that diversion from internal trade due to FTAs was significantly stronger than diversion from external trade.

Keywords: International Trade; Gravity; Free Trade Agreements; Trade Diversion (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2013-08-16, Revised 2014-09-15
New Economics Papers: this item is included in nep-cwa
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