Does the World Trade Organization Foster Successful Regional Trade Agreements?

31 Pages Posted: 14 Dec 2009

See all articles by Jason H. Grant

Jason H. Grant

Virginia Polytechnic Institute & State University

Christopher F. Parmeter

Virginia Polytechnic Institute & State University

Date Written: August 10, 2009

Abstract

The World Trade Organization’s (WTO) Committee on Regional Trade Agreements (CRTA) is charged with monitoring, examining, and ensuring the compliance of notified RTAs. We develop a comprehensive dataset covering 290 regional economic integration agreements and ask whether oversight and examination by the WTO has fostered successful RTAs. The data reveal that almost half (43%) of all agreements in existence (up to 2005) are neither notified nor accounted for in the RTA database published by the WTO. Using variation in the notification status of an RTA we are able to determine whether oversight of notified RTAs has fostered higher levels of intra-regional trade. Surprisingly, we find that non-notified RTAs are significantly outperforming their notified counterparts despite the fact that notified RTAs are subject to conformity reviews and compliance standards enshrined in GATT Article XXIV. The ex post results suggest that oversight by the WTO may actually impede the effectiveness of regional integration. However, further robustness checks reveal that RTAs that entered into force after 1995, marking the establishment of the WTO and a formal committee (the CRTA) to oversee RTAs, are doing a much better job of stimulating members’ trade relative to non-notified agreements. The results thus identify strategies to make regional trade agreements more effective going forward.

Keywords: International Trade, Regional Trade Agreements, Committee on Regional Trade Agreements, Gravity Equation

JEL Classification: F10, F13

Suggested Citation

Grant, Jason H. and Parmeter, Christopher F., Does the World Trade Organization Foster Successful Regional Trade Agreements? (August 10, 2009). Available at SSRN: https://ssrn.com/abstract=1523272 or http://dx.doi.org/10.2139/ssrn.1523272

Jason H. Grant

Virginia Polytechnic Institute & State University ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

Christopher F. Parmeter (Contact Author)

Virginia Polytechnic Institute & State University ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

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