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Trade effects of the Transatlantic Trade and Investment Partnership

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Abstract

In this paper we estimate the trade effects of the Transatlantic Trade and Investment Partnership by means of a gravity model. Even if making some assumptions related to the specificity of this trade agreement, our results are in line with the existing studies, implying unambiguously that a significant increase in trade is expected to follow a positive conclusion of the negotiation. Furthermore, the impact of the agreement increases significantly as the depth and the scope of the agreement grows. The results also show that there is a small but significant trade diversion effect, meaning that the agreement between EU and the US could produce a small reduction in trade with other areas. But given the much smaller coefficient of trade diversion compared to the trade creation effect, the expected net effect on trade remains strongly positive.

Suggested Citation

  • Elisa Borghi & Rodolfo Helg & Lucia Tajoli, 2014. "Trade effects of the Transatlantic Trade and Investment Partnership," LIUC Papers in Economics 279, Cattaneo University (LIUC).
    • Handle: RePEc:liu:liucec:279
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