Beyond Tariff Reductions: What Extra Boost from Trade Agreement Provisions?

42 Pages Posted: 20 Mar 2018

See all articles by Swati Dhingra

Swati Dhingra

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Rebecca Freeman

World Bank

Eleonora Mavroeidi

International Monetary Fund (IMF)

Date Written: March 2018

Abstract

There is a growing recognition that for developed economies, like the UK, tariff-free market access is just one of a number of measures that ease cross-border trade flows. Modern trade agreements go beyond tariff reductions by setting rules, such as market access and regulation of foreign service providers. We examine the contribution of deep non-tariff provisions on international trade in goods and services. Using a gravity model, we find that provisions related to services, investment, and competition make up half of the overall impact of economic integration agreements on trade flows. These deep provisions have larger effects for trade in services than for trade in goods, and their relative contribution is highest in sectors that facilitate supply chain activity, such as transportation and storage. We apply our sectoral estimates of deep provisions to examine two counterfactuals of the UK signing bilateral deals with the US and with China and India. We find that negotiating services, investment, and competition provisions in these future deals would boost trade relatively more in professional, scientific, and technical activities in the UK.

Keywords: deep provisions, EIAs, integration agreements, non-tariff barriers, Trade agreements, trade policy

JEL Classification: F10, F13, F14, F15

Suggested Citation

Dhingra, Swati and Freeman, Rebecca and Mavroeidi, Eleonora, Beyond Tariff Reductions: What Extra Boost from Trade Agreement Provisions? (March 2018). CEPR Discussion Paper No. DP12795, Available at SSRN: https://ssrn.com/abstract=3143445

Swati Dhingra (Contact Author)

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Rebecca Freeman

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Eleonora Mavroeidi

International Monetary Fund (IMF)

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

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