The Impact Of Preferential Trade Agreements On The Margins Of International Trade

Some studies go beyond the purely commercial effects of SAAs and analyse how SAAs influence other macroeconomic indicators such as employment and well-being at the national level (Arkolakis et al. 2012; Egger and Larch 2011; Romalis 2007; Trefler 2004). While most of these studies show that SAAs tend to increase trade between Member States, these studies tend to assess the impact of SAAs at national level. A recent exception is the study by Baccini et al. (2017), which analyzes the impact of US PTAs on US multinationals. In line with the forecasts of the most recent business models discussed in the next section, their results indicate that the benefits of preferential trade are very unevenly distributed, with more competitive firms earning the most. The results of our study indicate that the economic impact of such a trade agreement, the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DRC), is quite heterogeneous, both in the trade margin and in the nature of the company, and in particular in the product to be analyzed. In particular, our results indicate that while CAFTA-DR has allowed new companies to enter the U.S. market, and the total number of companies exporting to the U.S. market has increased with the entry into force of CAFTA-DR, the share of companies exporting to the U.S. has decreased relative to other markets. .

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