Template-Type: ReDIF-Paper 1.0
Author-Name: Richard Chisik
Author-X-Name-First: Richard
Author-X-Name-Last: Chisik
Author-Email: rchisik@ryerson.ca 
Author-Workplace-Name: Department of Economics, Ryerson University, Toronto, Canada
Author-Name: Sara Rohany Tabatabai
Author-X-Name-First:  Sara
Author-X-Name-Last: Rohany Tabatabai
Author-Email: srohanyt@ryerson.ca
Author-Workplace-Name: Department of Economics, Ryerson University, Toronto, Canada
Author-Name: 
Author-X-Name-First:    
Author-X-Name-Last: 
Author-Email: 
Author-Workplace-Name:  
Title: International Sourcing, Complementary Inputs, and the Structure of Trade Agreements: Deep, Shallow, Narrow, and Wide 
Abstract: We analyze Preferential Trade Agreement (PTA) formation among a subset of members of a multilateral agreement when imported inputs are complementary to one another. A shallow multilateral agreement that focuses only on border policies does not place countries on the efficiency frontier. Furthermore, there can be no viable shallow PTA that improves on that multilateral outcome. Alternatively, a deep PTA that is concerned only with behind-the-border policies does increase each country's welfare. This result suggests that the recent proliferation of PTA formation is driven by a need for deep integration. Although these deep PTAs increase welfare over a shallow multilateral agreement (that precludes negotiation on behind-the-border policies) the efficiency frontier can only be reached by a deep multilateral agreement that covers both border and behind-the-border policies. Whether the PTA can generate consensus approval for further multilateral deep integration depends on the structure of the PTA. 
Creation-Date: 2020-11
Number: 079
File-URL: http://economics.ryerson.ca/workingpapers/wp079.pdf
File-Format: Application/pdf
Handle: RePEc:rye:wpaper:wp079