This presentation by Susan F. STONE, Head, Emerging Policy Division, Trade and Agriculture Directorate, OECD, was made during the discussion “Competition provisions in trade agreements” held at the 18th meeting of the OECD Global Forum on Competition on 5 December 2019. More papers and presentations on the topic can be found at oe.cd/cpta.

1. Impact of Provisions in Trade
Agreements
Susan F. Stone
Head, Emerging Policy Division
Trade and Agriculture Directorate, OECD
Global Forum on Competition
5 December 2019

2. Impact of non-traditional provisions
Analysis of the impact of WTO ‘Plus’ and
WTO ‘Extra’ provisions encompasses:
– Whether they promote a move to
multilateralism.
– Whether they enhance trade among signing
members.
– Extent they divert trade from non-signatories.
OECD Trade and Agriculture
Directorate
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3. Examples of PTA Provisions
OECD Trade and Agriculture Directorate 3
"WTO +"
areas covered by the WTO
"WTO X"
areas beyond the WTO
• Tariffs industrial goods • Competition policy • Financial assistance
• Tariffs agricultural goods • Investment measures • Health
• Customs administration • Movement of capital • Human Rights
• Export taxes • IPR • Illegal immigration
• SPS measures • Labor market regulation • Illicit drugs
• State trading enterprises • Environmental laws • Industrial cooperation
• TBT measures • Visa and asylum • Information society
• Countervailing measures • Consumer protection • Mining
• Anti-dumping • Data protection • Money laundering
• State aid • Approximation of legislation • Nuclear safety
• Public procurement • Anti-corruption • Political dialogue
• TRIMS measures • Audiovisual • Public administration
• GATS • Civil protection • Regional cooperation
• TRIPS • Innovation policies • Research and technology
• Cultural cooperation • SMEs
• Economic policy dialogue • Social Matters
• Education and training • Statistics
• Energy • Taxation
• Terrorism
Source: World Bank

4. Examples of PTA Provisions
OECD Trade and Agriculture Directorate 4
"WTO +"
areas covered by the WTO
"WTO X"
areas beyond the WTO
• Tariffs industrial goods • Competition policy • Financial assistance
• Tariffs agricultural goods • Investment measures • Health
• Customs administration • Movement of capital • Human Rights
• Export taxes • IPR • Illegal immigration
• SPS measures • Labor market regulation • Illicit drugs
• State trading enterprises • Environmental laws • Industrial cooperation
• TBT measures • Visa and asylum • Information society
• Countervailing measures • Consumer protection • Mining
• Anti-dumping • Data protection • Money laundering
• State aid • Approximation of legislation • Nuclear safety
• Public procurement • Anti-corruption • Political dialogue
• TRIMS measures • Audiovisual • Public administration
• GATS • Civil protection • Regional cooperation
• TRIPS • Innovation policies • Research and technology
• Cultural cooperation • SMEs
• Economic policy dialogue • Social Matters
• Education and training • Statistics
• Energy • Taxation
• Terrorism
Source: World Bank

5. Looking at ‘Deep’ Trade Agreements
• What are “deep” trade agreements?
– Today’s Trade Agreements go beyond traditional measures (e.g. tariffs and
quotas) to include rules and regulations that affect trade in goods and
services, such as investment, competition, intellectual property rights,
digital transactions, etc.
• Why is this important?
– Regional integration has grown both in scope and in depth since the 1990s.
– Along with multilateral trade rules, PTAs can influence not just how
economies integrate, but how they function and grow.
– Vital that rules and commitments are informed by evidence as they can
influence domestic policies and development priorities.
– Problem: data and analysis have not capture the new dimensions of PTAs.
OECD Trade and Agriculture Directorate
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6. World Bank’s Deep Integration Database
OECD Trade and Agriculture Directorate
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Policy area Expert
Tariff
preferences
Mimouni, Pichot (ITC),
Espitia, Mattoo, Rocha (WB)
Customs Kieck (WB)
Export taxes Wu (Harvard)
TBT Piermartini (WTO), Espitia,
Rocha (WB)
Trade remedies Prusa (Rutgers)
Subsidies Rubini (Birmingham)
Services Magdeleine, Marchetti
(WTO), Gootiiz, Mattoo (WB)
Public
procurement
Ereshchenko (WTI), Shingal
(EUI)
STE/SOEs Rubini (Birmingham)
Policy area Expert
Competition
policy
Licetti, Miralles (WB), Teh
(WTO)
Investment Echandi, Kotschwar (WB)
Movements of
Capital
Gallagher, Thrasher (Boston),
Siegel (ex IMF)
IPR Mark Wu (Harvard)
Labor Raess (Reading), Sari (Geneva)
Environment Trachtman (Tufts), Monteiro
(WTO)
SPS Stone (OECD), Casinelli
(OECD)
Visa and asylum Hillmann (Georgetown),
Pauwelyn (Graduate Institute)
Rules of Origin Gourdon (OECD)
Source: World Bank

7. Evidence of Impact of PTAs
Evidence to date has been mainly at an aggregate level and
mixed for the impact of PTAs more broadly.
– Pre-FTA trade barriers. There is a positive correlation between the
bilateral level of ex-ante trade frictions and the measured impact of trade
agreements ex-post.
– Revealed market power and terms of trade. The empirical findings
support the idea that lower market power is associated with greater
concessions, and show asymmetric changes in trade following an agreement.
– New goods margin. The role of the extensive margin appears to vary within
versus across agreements. Within the same agreement, export growth does
tend to be relatively larger for exporters that start from a narrower range of
traded goods. Across agreements, however, it is not generally the case that
agreements between countries who trade fewer goods ex ante have larger
trade creation effects ex post.
OECD Trade and Agriculture Directorate
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8. Some Additional Findings
• Distance is an important factor in accounting for the heterogeneous
impact of trade agreements – the more distant two countries are, the less
trade is created.
• Other standard ‘gravity’ controls such as GDP, GDP per capita, and the
presence of a colonial relationship can also play a role.
– Among these variables, the most notable findings are that the economic size of the
importers and exporters – measured by log GDP – are positively associated with ex post
trade creation effects and that countries with lower GDP per capita tend to enjoy
relatively more export growth, even after controlling for differences in size and market
power.
• Generally speaking, countries with stronger institutional indicators tend to be
associated with stronger trade creation.
• Finally, in terms of factor endowments, physical capital shows no robust
correlation with the efficacy of the trade agreements in some samples, while levels
of exporter human capital shows a positive correlation.
OECD Trade and Agriculture Directorate
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9. Evidence on Deep Provisions
Some evidence on specific aspects of trade, for example GVCs. From Laget et
al (2018) :
– Deep PTAs increase the domestic value-added content of exports, mainly
through global value chains. Adding a provision to a PTA boosts domestic
value added of intermediate goods and services exports (in other words,
forward GVC linkages) by 0.48%, while an additional provision in a PTA
increases foreign value added of intermediate goods and services exports
(backward GVC linkages) by 0.38%.
– No significant impact on domestic and foreign value added was found on final
goods and services exports. The impact of deep trade agreements is usually
higher for value-added trade in services than value-added trade in goods.
– The estimates suggest that WTO extra provisions are particularly important for
GVC-related trade between North and South countries. On the other hand,
WTO plus provisions are still relevant for trade among developing countries
(South-South agreements).
OECD Trade and Agriculture Directorate
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10. Measuring Specific Elements
Recent work by the TAD has shown that cooperative measures on SPS and TBT
included in trade agreements can have a significant and positive effect on bilateral
trade flows.
OECD Trade and Agriculture Directorate 10
0
5
10
15
20
25
30
35
40
Provision Legally enforceable Transparency Agro-Food Manufacturing
Percent
SPS TBT
Source: Disdier et al 2019

11. Trade Impacts of ‘Deep’ SPS and TBT
• Having a SPS provision in a PTA increases bilateral trade on
average, by 19% and by 28% when this is legally enforceable.
• Having a TBT provision increases bilateral trade by 21% and by
28.5% when this is legally enforceable.
• Transparency provisions increase bilateral trade, on average, by
27% for SPS and by 25% for TBT transparency provisions.
• SPS provisions in agro-food increase bilateral trade on average by
28% and in manufacturing by 18.5%.
• TBT provisions in agro-food increase bilateral trade on average by
34% and in manufacturing by 21%.
• TBT MRA provisions increase, on average, bilateral trade by 55%
and Harmonisation by 45% in agro-foods sectors.
OECD Trade and Agriculture
Directorate
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12. But raised further questions…
 The evidence presented in Disdier et al. (2019) left open the question as to
whether the impacts measured were a direct result of specific provisions in
SPS and TBT chapters, or were functions of deeper agreements more
generally.
 Further, how do these provision impact trade costs? Early evidence shows
that more precise measurement type of SPS and TBT provisions are key in
understanding the impact on decreasing compliance costs.
 To what extent do these deeper trade provisions lead to trade diversion
especially with respect to compliance.
OECD Trade and Agriculture Directorate 12

13. SPS and TBT provisions in RTAs
(percentage of Total RTAs in force)
OECD Trade and Agriculture Directorate 13
0
20
40
60
80
100
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
SPS provisions in RTAs (%)
Standard Conformity Assessment
Transparency Institution
Other cooperation
0
20
40
60
80
100
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
TBT provisions in RTAs (%)
Standard Conformity Assessment
Transparency Institution
Other cooperation

14. Preliminary OECD Estimations
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 Co-operation on standards in PTAs tends to be a consistently positive
mechanism for enhancing trade flows. Indeed, across examined
agriculture sectors it has the largest impact on bilateral trade flows.
 Transparency provisions strongly affect trade flows of animal and
processed food in the case of TBT, and of oils and fats in the case of SPS.
 Provisions on conformity assessment for TBT measures (mutual
recognition or harmonisation) also have strong and significant trade
effects for animals, fats and oils, and processed food.
 Preliminary evidence shows that TBT and SPS provisions are not the
same and vary across sectors depending on any number of factors
including existing regulation and systems in place.

15. Potential Future Issues to Examine
 DESTA-OECD dataset developed includes specific questions related to
regulatory cooperation.
 To the extent these provisions are adequately represented in the
dataset, can be used to provide insights on specific provision vs.
general agreement impacts.
OECD Trade and Agriculture Directorate
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0 20 40 60 80 100 120 140 160
Obligation on transparency (article, provision)?
Chapter on transparency?
An article (provision) on regulatory co-operation?
Chapter on regulatory co-operation?
An article (provision) on regulatory coherence?
Chapter on regulatory coherence?
Obligation to publish regulations online?
Etablish a national point for regulatory co-ordination?
Reference to information exchanges?
Reference to co-operation on private standards?
Public comment obligation for new regulations?
Public comment obligation for new regulations that is open…
Public consultation obligation that is open to foreigners?
Consultation with foreign parties?
Consultation with the private sector?
Consultation with foreign parties AND the private sector?
Number of Agreements
Does the Agreement provide for...

16. Some Insights so far…
Several conclusions could be derived from the results:
• ‘Deep’ elements in SPS and TBT provisions in PTAs have a positive
and significant impact on trade, but these may vary.
• Legal enforceability, transparency mechanisms, mutual recognition
of TBT conformity assessment procedures have strong and robust
trade effects.
• These mechanisms represent the easiest step toward coordination of
SPS and TBT measures.
• The SPS-related mechanisms have more significant trade effects
than TBT-related mechanisms.
• These mechanisms impact more agri-food than manufacturing.
• Strong phasing-in effects in PTAs and in mechanisms.
OECD Trade and Agriculture Directorate
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17. FIND MORE AT
HTTPS://WWW.OECD.ORG/TRADE/
Thank You!
OECD Trade and Agriculture Directorate
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