RTA exit and trade: Evidence from losing shared trade agreement

Zhixiao Yao

No 01/26, CEPIE Working Papers from Technische Universität Dresden, Center of Public and International Economics (CEPIE)

Abstract: This paper provides the first global empirical evidence on the trade effects of losing shared regional trade agreement (RTA) coverage. Moving beyond single RTA exit cases, I study worldwide bilateral trade flows from 1980 to 2016 and estimate the effect of de-coverage using a structural gravity model together with a heterogeneity-robust staggered difference-in-differences design. I find that de-coverage reduces bilateral trade by about 37% on average, a magnitude similar to the gains from RTA formation. A key contrast with the RTA entry literature is its dynamics: while trade gains from RTA formation build up gradually over time, the adjustment to de-coverage is front-loaded. Heterogeneity analysis shows larger losses for dyads with longer prior RTA histories, geographically distant partners, and country pairs with asymmetric income levels. Product-level estimates show declines concentrated in intermediate and consumption goods.

Keywords: Trade Agreements; RTA Coverage Loss; Trade Disintegration; Structural Gravity; Staggered Difference-in-Differences; International Trade (search for similar items in EconPapers)
JEL-codes: F13 F14 F15 F53 (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/342518/1/197419387X.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:tudcep:342518

Access Statistics for this paper

More papers in CEPIE Working Papers from Technische Universität Dresden, Center of Public and International Economics (CEPIE) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().