Third-party Effect of Deep Trade Agreements:"Trade Diversion"or"Trade Spillover"
With the deepening of rules in regional trade agreements(RTAs),a great number of provisions that touch on domestic regulations within contracting parties have shaped new channels that affect third-party trade,posing challenges to the classic theory of trade diversion.This paper focuses on China's RTA network and empirically tests the impact of RTAs and the depth on China's third-party trade using China's export product data from 2002 to 2020.The results indicate that deep RTAs have generated a new type of spillover on third-party trade,which is different from trade diversion,and spreads through the spatial,demand,institutional,and RTA connections between RTA partners and third parties.These spillover effects originate because deep RTAs promote the integration of product regulatory rules between countries,reduce substantive obstacles to international trade,and have a public interest in contributing to international trade.And the positive spillover effects are significantly reflected in WTO-X and WTO-plus provisions,particularly in technology-intensive industries.The research findings contribute to understanding the spillover effects of deep RTAs from a third-party perspective,providing new theoretical support and policy insights for China to benchmark international high-standard rules and expand institutional openness.
Deep Regional Trade AgreementsThird-party EffectTrade DiversionSpillover Effect
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