Regional Trade Agreements Bilateral

Figure 3. Global maps of average BTA impact indices. The country`s export and import links (out, above) and import links are presented below. The red figures indicate that the relative importance of partners for each country has increased on average. The average is taken up by all trading partners with whom a given country introduced a BTA between 1995 and 2008. In this work, we use the idea of flow networks to define commercial connectivity (IT) between two countries based on input dependency measures and outputs originally used in [27]. The current U.S. government`s announcement to review the country`s trade policy and negotiate “new and better agreements” on TAAs [1] has reignited the debate about the effects of such agreements and on the underlying interests and strategies. In recent years, in particular, the BDU has become an increasingly important and often used political instrument to establish and intensify close trade relations.

In these agreements, countries grant each other trade privileges with respect to trade barrier concessions, including reductions in tariffs and quotas, as well as facilitating market access and competition rules. The theory suggests that removing trade barriers increases trade between the economies concerned, which stimulates economic growth in the sub-treated countries [2]. Previous empirical studies, mainly using so-called gravity models, largely confirm a positive effect of BTA on trade [3-6]. However, they also indicate that this could be at the expense of offshoring production from more efficient suppliers to other countries [3, 6, 7]. This allows BTAs to improve some trade relationships while weakening others that are not directly covered by the agreement. As a result, NTOs can change the structure of the international trade network of in-exit links between national economic sectors. The effectiveness of the BTA in improving trade between the contracting parties depends on the specific characteristics of the countries concerned. In this context, it has been proposed that geographical proximity, common language and/or cultural context or similar GDP be beneficial for increasing commercial profits [8-11].

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