Trade, conflicts and political integration : explaining the heterogeneity of regional trade agreements,” Documents de travail du Centre d'Economie de la Sorbonne bla08022, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

This paper proposes an explanation for the heterogeneity of regional trade agree-ments (RTAs) regarding their form. Because the world is constituted by independent political entities, international trade flows take place in a system where property rights are insecure and where interstate disputes can harm gains from trade. In this the-oretical framework, trade and security issues interact in the formation of RTAs, so that their determinants differ according to their level of political integration, defined by their ability to promote the negotiated settlement of conflicts. Empirical results confirm that countries more subject to interstate disputes and naturally more open to trade are more likely to create politically integrated regional agreements, such as common markets or custom unions. On the contrary, international insecurity deters the formation of shallow agreements implying a weak institutional framework, such as preferential or free trade agreements