Not all ptas are equal credible commitment through ptas and their effects on trade
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Not all PTAs are Equal: Credible Commitment through PTAs and their Effects on Trade PowerPoint PPT Presentation


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Not all PTAs are Equal: Credible Commitment through PTAs and their Effects on Trade. Raymond Hicks Soo Yeon Kim Princeton University University of Maryland. Question: How do PTAs affect trade among participants?. Focus: Are the effects of PTAs homogeneous?.

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Not all PTAs are Equal: Credible Commitment through PTAs and their Effects on Trade

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Not all ptas are equal credible commitment through ptas and their effects on trade

Not all PTAs are Equal:Credible Commitment through PTAs and their Effects on Trade

Raymond Hicks Soo Yeon Kim

Princeton University University of Maryland


Question how do ptas affect trade among participants

Question: How do PTAs affect trade among participants?

Focus:

Are the effects of PTAs homogeneous?


Argument ptas signal credible commitment to trade liberalization

Argument: PTAs signal credible commitment to trade liberalization

PTAs differ in the level of credibility embedded in their provisions

PTAs therefore differ in their effect on trade as a function of these provisions


Coding rtas and levels of credibility weighted index 5 categories 19 components

Coding RTAs and Levels of Credibility:Weighted index 5 categories, 19 components

  • Type of RTA

  • Breadth of Coverage

  • Depth of Coverage

  • Pace of Change

  • Ratification and Withdrawal


Overview 57 rtas in asia 1970 2006

Overview:57 RTAs in Asia, 1970-2006

  • Timing: higher scores for post-1995 RTAs

  • Higher scores for FTAs vs. PTAs

  • Higher scores for bilateral vs. multilateral agreements

  • Country differences: more developed countries (Japan, Singapore, Korea) have higher credibility scores


Quantitative analysis

Quantitative Analysis:

  • Unit of analysis: directed-dyad year

  • Sample: dyads with at least one Asian country

  • Dependent variable: imports (in constant US dollars, 2000) of country i from country j in a given year

  • Independent variable of interest: dummy and continuous measures for RTA

  • Control variables: GDP, GDP per capita, land size, border, distance, language, colonial ties


Findings rtas and trade 1970 2003

Findings:RTAs and Trade, 1970-2003


Figure 1 rta signing vs rta credibility

Figure 1: RTA Signing vs. RTA Credibility


Conclusions

Conclusions:

  • RTAs differ in the levels of credibility embodied in their provisions

  • Analysis of RTAs in Asia shows that RTA signing and RTA credibility differ in their effect on trade for participants.

  • Surge in RTAs in recent years may lead to “crowding” in the Asian region, which may dilute their trade-creation effects.


Future modifications for rta data

Future Modifications for RTA Data

  • Rules of origin requirements

    • Percentage of value content?

    • Tariff classification change?

  • Withdrawal

    • Longer time until withdraw takes effect = more credibility?


Not all ptas are equal credible commitment through ptas and their effects on trade

  • Thank you!


Not all ptas are equal credible commitment through ptas and their effects on trade

  • Backup slides


Rta credibility index part 1

RTA credibility index, part 1

  • Type of RTA proposed – level of integration in the agreement (weight = 0.20)

  • Breadth of coverage – restrictions on actions of government (weight = 0.175)

    • Tariff reductions reciprocal (0.025)

    • Agriculture products covered (0.025)

    • Industrial products covered (0.025)

    • NTBs covered (0.05)

    • Technical barriers to trade (0.05)


Rta credibility index part 2

RTA credibility index, part 2

  • Depth of coverage – stringency of enforcement mechanisms (weight = 0.45)

    • Dispute settlement (0.075)

    • Dispute settlement resolution (0.025)

    • Dispute settlement compensation (0.05)

    • Escape clause identification (0.075)

    • Escape clause action (0.05)

    • Dumping clauses (0.075)

    • Formal institutions (0.05)

    • Timing of meetings (0.05)


Rta credibility index part 3

RTA credibility index, part 3

  • Pace of change – speed of movement to final objective (weight = 0.10)

    • Timetable (weight = 0.025)

    • Extent of initial tariff cuts (weight = 0.075)

  • Administration – operation of the agreement (weight = 0.075)

    • Ratification (weight =0.025)

    • Renewal (weight =0.025)

    • Amendment (weight =0.025)


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