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We study market liberalisation under imperfect competition in the presence of price effects. For this purpose, we build a three-country model of international trade under monopolistic competition. The neighbouring effect translates how the size effect propagates across countries. When a country increases in size, its relative wage increases, as well as that in a small and nearby country, whereas that in a large and distant country falls. We also show that a preferential trade agreement increases the relative wage, the welfare and the terms of trade in the partner countries, where the integration effect dominates, while lowering those in the third country.

Increased complexity and density of transnational problems create unprecedented challenges and opportunities for contemporary international governance. “Issue linkage” is one institutional arrangement through which states address these changing circumstances. In this article, we examine the widening scope of the nontrade agenda in preferential trade agreements (PTAs). Nontrade issues (NTIs) such as human rights, democracy, environment, corruption, and labor standards are increasingly linked to PTAs. This issue linkage has important implications for understanding changing patterns of international trade, including the shift to PTAs and the rise of NTIs. We show that (1) states’ choices to commit to bilateral or plurilateral versions of traditional PTAs and to PTAs with NTIs are highly interdependent, (2) states increasingly incorporate NTIs into PTAs, as the associated costs of policy change are lowered through earlier agreements, and (3) network pressures favor the increasing adoption of bilateral and especially plurilateral NTIs over time. Using an original data set on NTIs covering 522 PTAs and spanning the period 1951 to 2009, we evaluate states’ motives behind the widening nontrade agenda of trade agreements using longitudinal network modeling. We employ multiplex coevolution stochastic actor-oriented network models in a novel design to account for interdependencies within and across states’ decisions. Following a descriptive mapping of major NTIs, we evaluate our theoretical arguments. Testing against the alternative explanations of power and commitment, we find that endogenous cost considerations are the most significant factor explaining the inclusion of NTIs into PTAs.

Purpose. To evaluate the effectiveness of concluding regional preferential trade agreements of asymmetric partners based on cointegration analysis. Methodology. The research hypothesis is that the deepening of the trade and economic integration of asymmetric partners through the conclusion of a regional trade agreement will lead to an increase in the cointegration of their bilateral trade indicators. The Engle-Granger cointegration test was used to confirm the presence of cointegration of export time series. The statistical data of the World Trade Organization, the International Monetary Fund, the Trading Economics online resource, and the Office of the US Trade Representative constituted the information and analytical base of the study. Finding. It was established that the deepening of the trade and economic integration of asymmetric partners should ensure mutual effects in the transition from multilateral trade under the terms of the WTO to the format of a regional preferential agreement. As evidence of obtaining such effects, it is proposed to recognize the provision of positive stable dynamics of bilateral trade performance indicators of asymmetric partners, which is synchronized in time and proportional to their trade and economic potential, which will mean the cointegration of their trade flows. It is hypothesized that the deepening of the trade and economic integration of asymmetric partners through the conclusion of a regional preferential agreement leads to an increase in the cointegration of bilateral trade indicators. Testing of the hypothesis regarding the growth (or emergence in the case of a previous absence) of cointegration of indicators of bilateral trade of asymmetric partners in the conditions of a free trade zone was carried out on the example of foreign trade relations of the USA with the countries of Central and South America. The Engle-Granger cointegration test was used to confirm the hypothesis. The results of the test showed that after the conclusion of a preferential regional agreement, as a rule, cointegration of the time series of bilateral exports of the United States and trading partners occurs. The obtained results allow us to accept the hypothesis about the effectiveness and mutual expediency of deepening the trade and economic integration of countries with an asymmetric level of economic development. Originality. A methodical approach to evaluating the effectiveness of concluding regional preferential trade agreements of asymmetric partners is proposed on the basis of cointegration analysis, which will contribute to the deepening of the theoretical and methodological foundations of the study of the trade and economic potential of integration associations of asymmetric countries. Practical value. The obtained results create a basis for optimizing Ukraine’s foreign trade priorities by testing the cointegration of the country’s foreign trade indicators with asymmetric partners. This will allow one both to analyse the effectiveness of mutual liberalization mechanisms within the already functioning free trade zones, and to evaluate the prospects of Ukraine joining other preferential agreements.

Preferential trade agreements (PTAs) have been proliferating for the last twenty years. A large literature has studied various aspects of this phenomenon. Until recently, however, many large-N studies have paid only scant attention to variation across PTAs in terms of content and design. Our contribution to this literature is a new dataset on the design of trade agreements that is the most comprehensive in terms of both variables coded and agreements covered. We illustrate the dataset’s usefulness in re-visiting the questions if and to what extent PTAs impact trade flows. The analysis shows that on average PTAs increase trade flows, but that this effect is largely driven by deep agreements. In addition, we provide evidence that provisions that tackle behind-the-border regulation matter for trade flows. The dataset’s contribution is not limited to the PTA literature, however. Broader debates on topics such as institutional design and the legalization of international relations will also benefit from the novel data.

The government of Bolivia seeks to reinvigorate the nontraditional export sector as part of its national development strategy. This Country Study investigates the role that trade should play in Bolivia's development strategy, given the country's rich resource endowment, and examines the lessons of Bolivia's integration into the global economy. Considering the past links between trade and Bolivia's economy, the study analyzes the impact of different scenarios on growth, employment, trade flows, and poverty; it also evaluates barriers to higher export competitiveness and constraints on exporting firms. The study concludes that preferential access to world markets is necessary but not sufficient for success in nontraditional exports. Efficient services are necessary to reduce exporters' costs, and the government should be more proactive in laying the foundation for export diversification, increasing the effectiveness of institutions, and addressing impediments to crossborder trade.

Human rights, labour standards, and environmental protection standards are commonly linked to trade. Because these links come in different forms, the question arises: what accounts for such variation? An examination of the wide variety of non-trade issues (NTIs) in preferential trade agreements (PTAs) reveals that prominent explanations fall short of explaining this variation. I argue that domestic characteristics of trade partner countries trigger lobbying by interest groups and cause design changes. I hypothesize that strong import and wage pressure increases lobbying by social and environmental protection advocates. A large difference between member states regarding civil and political rights protection levels should trigger NGO activity, but only if at least one member complies at a very high level already. In order to test the argument, I rely on a novel dataset including newly coded data on NTIs design for 474 PTAs signed between 1990 and January 2016. The findings using multivariate regression analysis show that linking trade and social or environmental clauses is motivated by strategic and the inclusion of political rights by substantial interests. This study contributes to the literature on rational design of international institutions, legalization, and issue-linkage.

We study the effect of the labor clauses (LCs) in preferential trade agreements (PTAs) on the informal economy. Using a sample comprising 112 countries for the period 2000-2017, we show that PTAs increase informality in low- and middle-income economies (LMIEs), regardless of whether LCs are included or not. This result is confirmed when accounting for the heterogeneity of parties to the agreement. Finally, PTAs with LCs whose implementation relies on deep cooperation mechanisms decrease informality in LMIEs when their partners are high-income economies. The policy implication is that LMIEs should foster the integration of LCs enforced through deep cooperation mechanisms.

Preferential trade agreements have become common ways to protect or restrict access to national markets in products and services. The United States has signed trade agreements with almost two dozen countries as close as Mexico and Canada and as distant as Morocco and Australia. The European Union has done the same. In addition to addressing economic issues, these agreements also regulate the protection of human rights. InForced to Be Good, Emilie M. Hafner-Burton tells the story of the politics of such agreements and of the ways in which governments pursue market integration policies that advance their own political interests, including human rights. How and why do global norms for social justice become international regulations linked to seemingly unrelated issues, such as trade? Hafner-Burton finds that the process has been unconventional. Efforts by human rights advocates and labor unions to spread human rights ideals, for example, do not explain why American and European governments employ preferential trade agreements to protect human rights. Instead, most of the regulations protecting human rights are codified in global moral principles and laws only because they serve policymakers' interests in accumulating power or resources or solving other problems. Otherwise, demands by moral advocates are tossed aside. And, as Hafner-Burton shows, even the inclusion of human rights protections in trade agreements is no guarantee of real change, because many of the governments that sign on to fair trade regulations oppose such protections and do not intend to force their implementation. Ultimately, Hafner-Burton finds that, despite the difficulty of enforcing good regulations and the less-than-noble motives for including them, trade agreements that include human rights provisions have made a positive difference in the lives of some of the people they are intended-on paper, at least-to protect.

Digital Economic Agreements (DEAs) represent a novel and increasingly influential instrument in the governance of digital trade. Departing from the broader and more traditional scope of Preferential Trade Agreements (PTAs), DEAs focus exclusively on digital trade, establishing dedicated regulatory frameworks for the data-driven economy. This article offers a detailed analysis of the architecture, substantive scope and underlying dynamics of DEAs. It maps the convergences and divergences among existing agreements, with particular attention paid to provisions on data governance and source code, situating DEAs within the broader landscape of PTAs’ digital trade rulemaking. We further contrast the DEA model with the ongoing World Trade Organization (WTO) negotiations towards an agreement on electronic commerce and examine the legal compatibility of DEAs with WTO law. We argue that DEAs represent a flexible and forward-oriented model for digital trade regulation. Nonetheless, their impact on the ground and whether they reduce or rather exacerbate the existing regulatory fragmentation in digital trade governance are questions that warrant further attention.