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Preferential Trade Agreements and Non-tariff Measures

Author

Listed:
  • David J. Kuenzel

    (Department of Economics, Wesleyan University)

  • Rishi R. Sharma

    (Department of Economics, Colgate University)

Abstract

We study the product-level effects of Preferential Trade Agreements (PTAs) on the implementation of non-tariff measures (NTMs) using a global database spanning the 2000-2017 period. Employing an instrumental variable strategy, we provide evidence that an increase in the import share of PTA partners leads to a reduction in the application of NTMs. Exploring several mechanisms, we find that these effects are driven by products with higher preferential margins, the gap between MFN and preferential tariff rates. This result is consistent with what we call a “rent preservation effect,” whereby PTA partner countries push to limit the imposition of NTMs in order to preserve their preferential rents. Importantly, higher PTA import shares contribute to multilateral liberalization by lowering both the usage of NTMs against PTA members and non-PTA partners.

Suggested Citation

  • David J. Kuenzel & Rishi R. Sharma, 2025. "Preferential Trade Agreements and Non-tariff Measures," Wesleyan Economics Working Papers 2025-001, Wesleyan University, Department of Economics.
    • Handle: RePEc:wes:weswpa:2025-001
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    File URL: http://repec.wesleyan.edu/pdf/dkuenzel/2025001_kuenzel.pdf
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    References listed on IDEAS

    as
    1. Nuno Limão, 2018. "Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the United States," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 13, pages 353-371, World Scientific Publishing Co. Pte. Ltd..
    2. Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
    3. Prusa, Thomas J. & Teh, Robert & Zhu, Min, 2022. "PTAs and the incidence of antidumping disputes," Journal of International Economics, Elsevier, vol. 138(C).
    4. Tabakis, Chrysostomos & Zanardi, Maurizio, 2019. "Preferential trade agreements and antidumping protection," Journal of International Economics, Elsevier, vol. 121(C).
    5. Weidner, Martin & Zylkin, Thomas, 2021. "Bias and consistency in three-way gravity models," Journal of International Economics, Elsevier, vol. 132(C).
    6. Baybars Karacaovali & Nuno Limão, 2018. "The clash of liberalizations: Preferential vs. multilateral trade liberalization in the European Union," World Scientific Book Chapters, in: Policy Externalities and International Trade Agreements, chapter 14, pages 373-401, World Scientific Publishing Co. Pte. Ltd..
    7. Magdalene Silberberger & Frederik Stender, 2018. "False friends? Empirical evidence on trade policy substitution in regional trade agreements," The World Economy, Wiley Blackwell, vol. 41(8), pages 2175-2199, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Trade Agreements; Non-tariff Measures;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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