RTAs' Proliferation and Trade‐diversion Effects: Evidence of the ‘Spaghetti Bowl’ Phenomenon

Sorgho, Zakaria

doi:10.1111/twec.12295

Cited by 23 publications

(13 citation statements)

References 40 publications

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“…Regional trade agreements are sweeping the multilateral trade system like wildfire (Sorgho, ), and to date, there are about 470 such agreements. It is likely that regional trade agreements will continue increasing especially in the current uncertainty surrounding the global trade environment.…”

Section: Introductionmentioning

confidence: 99%

Can the Regional Comprehensive Economic Partnership minimise the harm from the United States–China trade war?

Mahadevan

Nugroho

2019

World Economy

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Using ex post tariff schedules for the first time, it was found that the global gains provided by the Regional Comprehensive Economic Partnership (RCEP) are not enough to overcome the negative impacts of the United States–China trade dispute. While trade tensions cause China's welfare loss to be more than twice as large as the United States, they provide some trade diversion to RCEP members. But of concern is if India successfully delays the conclusion of the RCEP even by a year, there will be a global loss of US$17.7 billion. The RCEP is also beneficial for the emerging economy of Vietnam and the high‐tariff‐imposing Korean economy. The results obtained here are, however, conservative as reduction in non‐tariff barriers and other positive spillover effects of trade liberalisation related to investment and productivity improvements due to competition or increased intra‐industry trade could not be accounted for.

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Section: Introductionmentioning

confidence: 99%

Can the Regional Comprehensive Economic Partnership minimise the harm from the United States–China trade war?

Mahadevan

Nugroho

2019

World Economy

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“…Building on previous work (Pal, 2008;Sorgho, 2016;Ullah & Inaba, 2011) we argue that gains from RTAs are doubtful while the proliferation of RTAs has globally negative effect on trade. The simple existence of RTAs does not necessarily guarantee that multilateral trading system will be the next step.…”

Section: Most Favoured Nation (Mfn)mentioning

confidence: 58%

Imperfection of the World Trade Organization as a Hazard for International Business

Żołądkiewicz

Orłowska

2020

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This paper examines the negative impact of the paralysis observed in the World Trade Organization (WTO) functioning on international business. We provide an overview of the loopholes in the WTO rules and principles which became serious threats for the multilateral trading system. Our research identifies important loopholes in the MFN clause, DSB and Appellate Body. We bring clarity that the paralysis observed in the WTO functioning is a consequence of these factors. The deviations and exceptions of the WTO rules permit the WTO members to compete “unfairly”. China is among the economies which are the most efficient in this respect. We term China’s behaviour on the global market as “economic factitious disorder”. It can be explained as permanently maintaining the status of a developing country by China and using preferences for LDCs despite a really high level of economic development. These findings indicate that the WTO lacks the mechanism to react and to prevent such abuses. They were not envisaged by the WTO creators, which suggests the need of the WTO reform. We contribute to international business research and the international organizations literature by identifying the causes of the paralysis of the WTO functioning.

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“…While Dai, Yotov, and Zylkin () find that the trade diverting effect of a new RTA does not depend on how many free trade agreements the country already has, other studies have found that RTA trade effects do depend on the number of agreements already in place. Sorgho () and Cheong, Kwak and Tang () both find that RTA trade effects are smaller if the country already has pre‐existing regional trade agreements. If the latter result is correct, then as countries sign new trade agreements, the trade diversion caused by each new trade deal will decline in importance.…”

Section: Which Countries Would Make the Ideal Rta Trading Partners?mentioning

confidence: 98%

The Increasing Irrelevance of Trade Diversion

Magee

2017

Kyklos

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Summary This paper is intended as a guide for policymakers considering new regional trade agreements. The data provided here show that only about a quarter of imports are potentially subject to trade diversion from new agreements (i.e. they come from countries outside of regional trading blocs and in industries with positive most‐favored nation tariffs). Since this percentage is steadily declining with the increasing number of regional trade agreements and the falling level of tariffs, trade diversion is becoming increasingly irrelevant as a concern for new trade deals. The paper also estimates how each potential new bilateral free trade agreement would affect a country's imports and exports, as well as whether the increased imports would replace domestic production, imports from other RTA partners, or imports from non‐RTA partners. In this way, the estimates are able to shed light on which countries make the best partners for new regional trade agreements. Finally, the paper provides estimates of the trade effects for two large potential new regional agreements: the Transatlantic Trade and Investment Partnership and the Trans‐Pacific Partnership.

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RTAs' Proliferation and Trade‐diversion Effects: Evidence of the ‘Spaghetti Bowl’ Phenomenon

Cited by 23 publications

References 40 publications

Can the Regional Comprehensive Economic Partnership minimise the harm from the United States–China trade war?

Can the Regional Comprehensive Economic Partnership minimise the harm from the United States–China trade war?

Imperfection of the World Trade Organization as a Hazard for International Business

The Increasing Irrelevance of Trade Diversion

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