CEP LSE RSS Contact Us YouTube Facebook Twitter

Abstract:

cover
CEP Discussion Paper
Beyond Tariff Reductions: What Extra Boost From Trade Agreement Provisions?
Swati Dhingra, Rebecca Freeman and Eleonora Mavroeidi March 2018
Paper No' CEPDP1532:
Full Paper (pdf)

JEL Classification: F10; F13; F14; F15


Tags: trade agreements; integration agreements; eias; trade policy; provisions; non-tariff barriers

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.