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Unpublished Paper
Has the World Trade Organization Promoted Successful Regional Trade Agreements?
Under Revision for Economic Inquiry (2010)
  • Jason H. Grant, Virginia Polytechnic Institute and State University
  • christopher parmeter, University of Miami
Abstract

The WTO’s Committee on Regional Trade Agreements (CRTA) is charged with monitoring, examining, and ensuring the compliance of RTAs. In this paper we ask whether oversight and examination has fostered successful RTAs using bilateral trade flows as our metric. We develop a comprehensive dataset covering 290 regional economic integration agreements that have entered into force since 1960. Remarkably, the data reveal that almost half (43%) of all agreements in existence (up to 2005) are neither notified nor accounted for in the RTA database published by the WTO. We then exploit variation in the notification status of an RTA to determine whether oversight of notified RTAs by the CRTA has fostered higher levels of intraregional trade. Surprisingly, we find very little historical evidence that notified RTAs, which are subject to conformity reviews and compliance standards enshrined in Article XXIV, trade more than non-notified agreements. However, when we focus on RTAs that were entered into force after 1990, which marks the great proliferation of regional trade, we find that the CRTA has helped to increase trade, ceteris paribus, over trade agreements not notified to the WTO. These results suggest that the historical process of oversight was not apt to fostering trade, but the more transparent and formal committee, started in 1994 has been able to achieve additional gains to trade via proper oversight. These results thus identify strategies to make regional trade agreements more effective going forward.

Publication Date
2010
Citation Information
Jason H. Grant and christopher parmeter. "Has the World Trade Organization Promoted Successful Regional Trade Agreements?" Under Revision for Economic Inquiry (2010)
Available at: http://works.bepress.com/parms/27/