On the trade-diversion effects of free trade agreements

Trade-diversion effects of free trade agreements (FTAs) have not been thoroughly examined empirically. Using a novel empirical approach, we confirm that FTAs divert trade away from non-member countries and even more so from internal trade (domestic sales) in member countries. •We identify the trade...

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Bibliographic Details
Published in:	Economics letters 2014-02, Vol.122 (2), p.321-325
Main Authors:	Dai, Mian, Yotov, Yoto V., Zylkin, Thomas
Format:	Article
Language:	eng
Subjects:	Empirical research Free trade Free trade agreements Gravity International trade Studies Trade agreements Trade diversion
Online Access:	Get full text
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Summary:	Trade-diversion effects of free trade agreements (FTAs) have not been thoroughly examined empirically. Using a novel empirical approach, we confirm that FTAs divert trade away from non-member countries and even more so from internal trade (domestic sales) in member countries. •We identify the trade diverting effects of Free Trade Agreements (FTAs).•We confirm that FTAs divert trade away from non-member countries.•We find that trade diversion is stronger for imports than for exports.•Diversion from internal trade is stronger than diversion from external trade.•Internal trade diversion is increasing in the number of FTAs.
ISSN:	0165-1765 1873-7374