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Has The World Trade Organization Promoted Successful Regional Trade Agreements?

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  • Grant, Jason H.
  • Parmeter, Christopher F.

Abstract

This study uses econometric gravity equations to test whether the WTO has promoted successful regional trade agreements (RTA). Two important findings emerge. First, we find that two countries that are members of the GATT/WTO and enter into a regional trade agreement stimulate trade. However, the effect on trade is not nearly as large as that between two RTA members that belong to the GATT/WTO. Contrary to the findings in Rose (2004), this result tends to support the fact that the GATT/WTO has liberalized multilateral trade, outside of RTAs. In other words, the effect of an RTA on countries’ trade who are not party to the GATT/WTO should generate a large RTA trade response due to relatively large pre-existing trade distortions. Second, we show that the GATT/WTO has not promoted successful RTAs using explicit RTA variables that controls for the notification status (to the GATT/WTO) of an RTA. Interestingly, non-notified RTAs trade significantly more than their notified counterparts.

Suggested Citation

  • Grant, Jason H. & Parmeter, Christopher F., 2008. "Has The World Trade Organization Promoted Successful Regional Trade Agreements?," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6551, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea08:6551
    DOI: 10.22004/ag.econ.6551
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    Cited by:

    1. Hamanaka, Shintaro, 2014. "Study of Non-Notified Trade Agreements to the World Trade Organization: The Case of Asia and Pacific Region," Working Papers on Regional Economic Integration 132, Asian Development Bank.

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