Evaluating the trade effect of developing regional trade agreements: a semi-parametric approach’, World Bank Policy Research Working Paper Series, no. 4220. —— 2009, ‘Evaluating the trade effect of developing regional trade agreements: a semi-parametric a

Many recent papers have pointed to ambiguous trade effects of developing regional trade agreements (RTAs), calling for a reassessment of their economic merits. We focus on seven such agreements currently in force in Sub-Saharan Africa (ECOWAS and SADC), Asia (AFTA and SAPTA) and Latin America (CACM, CAN and MERCOSUR), estimating their impacts on their members ' trade flows. Instead of the usual dummy variables for RTAs, we propose a variable taking into account the number of years of membership. We then combine a gravity model with kernel estimation techniques so as to capture the non-monotonic trade effects while imposing minimal structure on the model. The results indicate that except for SAPTA, all these RTAs have had a positive impact on their members ' intra-trade over the estimation period (1960-1999). AFTA seems to be the most successful among them with an estimated positive impact on its members ’ imports from the rest of the world (ROW), but its impact on their exports to the ROW is rather limited. During its first ten years of existence, ECOWAS appears to have had a positive impact on its members ’ imports from the ROW, but this positive impact vanished over time. SAPTA's negative impact on its members ' intra-trade is probably an implicit effect of the India-Pakistan tensions over the estimation period