Trade Creation and Trade Diversion in Deep Agreements

44 Pages Posted: 29 Sep 2017 Last revised: 30 Apr 2018

See all articles by Aaditya Mattoo

Aaditya Mattoo

World Bank - Development Research Group (DECRG)

Alen Mulabdic

World Bank

Michele Ruta

Economic Research Division, WTO; Columbia Business School - Economics Department; International Monetary Fund (IMF)

Date Written: September 27, 2017


Preferential trade agreements have boomed in recent years and extended their reach well beyond tariff reduction, to cover policy areas such as investment, competition, and intellectual property rights. This paper uses new information on the content of preferential trade agreements to examine the trade effects of deep agreements and revisit the classic Vinerian question of trade creation and trade diversion. The results indicate that deep agreements lead to more trade creation and less trade diversion than shallow agreements. Furthermore, some provisions of deep agreements have a public good aspect and increase trade also with non-members.

Keywords: International Trade and Trade Rules, Competition Policy, Competitiveness and Competition Policy, Trade Policy, Rules of Origin, Trade and Multilateral Issues, Regulatory Regimes, Judicial System Reform, Intellectual Property Rights, Social Policy, Legislation, Legal Products, Common Property Resource Development, Real & Intellectual Property Law, Legal Reform, Human Rights

Suggested Citation

Mattoo, Aaditya and Mulabdic, Alen and Ruta, Michele, Trade Creation and Trade Diversion in Deep Agreements (September 27, 2017). World Bank Policy Research Working Paper No. 8206, Available at SSRN:

Aaditya Mattoo (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H Street, N.W.
Room MC 3-327
Washington, DC 20433
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202-458-8047 (Phone)
202-676-9810 (Fax)


Alen Mulabdic

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Michele Ruta

Economic Research Division, WTO ( email )

Rue de Lausanne 154
CH-1211 Geneva


Columbia Business School - Economics Department ( email )

420 West 118th Street
New York, NY 10027
United States

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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