The breadth-depth trade-off and varieties of preferential trade agreements

The varieties of preferential trade agreements have increased in recent decades. Regional blocs concluding deals with third-party actors have contributed immensely to these changes in trade agreements. These varieties have motivated our reexamination of the breadth–depth trade-off in trade agreements. We argue that a breadth–depth trade-off is present in initial plurilateral agreements. Large groups of states at this initial stage exhibit greater preference heterogeneity that discourages deeper cooperation. Conversely, we expect the breadth–depth trade-off to be absent in follow-up plurilateral agreements and region-to-third-party agreements. For the former, the initial pacts serve a learning function that enables deeper cooperation. For the latter, institutional mechanisms lessen preference heterogeneity and transforms negotiations to approximate bilateral trade talks that alleviate the breadth–depth trade-off. Our test on 234 trade agreements finds support for our argument. Our paper highlights the importance of distinguishing trade negotiation configurations to better understand how membership affects the depth of agreements