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Do Deep Trade Agreements with Intellectual Property Provisions Actually Increase International Trade?

Author

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  • Ridwan Ah Sheikh

    (Department of Economics, Delhi School of Economics)

  • Sunil Kanwar

    (Department of Economics, Delhi School of Economics)

Abstract

This paper utilizes a comprehensive dataset on deep trade agreements between 1988-2017 in a panel of 210 countries to examine the impact of preferential trade agreements (PTAs) on trade while specifically focusing on the provisions related to intellectual property. The present paper employs a standard structural gravity model using Poisson Pseudo-Maximum Likelihood (PPML) estimation that simultaneously accounts for heteroskedasticity and preponderance of zeros in trade flows. We include rich set of fixed effects to account for multilateral resistance factors and endogeneity in binary trade agreements indicators. Moreover, we incorporate treatment leads and lags to estimate the anticipatory and phased-in impacts of our key trade policy instruments. The results indicate that both PTAs and IPR-related provisions (IPAs) contribute significantly in enhancing trade among member countries. Within the broad category of IPAs, those related to accession/ratification, national treatment, trademark, patents, industrial design, and enforcement aspects reveal a significant positive impact on trade. Additionally, the results demonstrate that IPAs positively influence bilateral trade flows in both high-IP-intensive and low-IP-intensive products, with a stronger impact observed in the high-IP-intensive group. Similarly, among the high-IP intensive group, provisions related to patents have a stronger positive impact on concurrent trade flow in patent-intensive industries, with these effects persisting up to two years after agreements’ inception. The provisions related to trademark and copyrights resulted in a significant reduction in trade flows within trademark-intensive and copyright-intensive industries, respectively, with any positive impact observed only after a lag. These results highlight the potential impact of deep trade agreements with intellectual property provisions, both at the extensive margin (i.e., number of IP-related provisions) as well as the intensive margin (i.e., specific provisions such as those related to copyrights, patents, enforcement, etc.) across different industries with varying degree of IPR-intensity, an aspect that has been inadequately explored in previous studies.

Suggested Citation

  • Ridwan Ah Sheikh & Sunil Kanwar, 2024. "Do Deep Trade Agreements with Intellectual Property Provisions Actually Increase International Trade?," Working papers 344, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:344
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    Keywords

    Preferential trade agreements; Deep trade agreements; Intellectual property rights; International trade. JEL codes: F100; F130; F140; O340;
    All these keywords.

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