What Is Non-Reciprocal Agreement

This paper examines the impact of reciprocal and non-reciprocal trade agreements on exports of trade agreements from developing countries to industrialized countries, using the most recent data and techniques available to estimate structural gravity and taking into account the direction of export flows of mutual agreements. The use of the data up to 2016 allows us to analyse whether non-reciprocal preferences have been eroded in recent years due to the many reciprocal trade agreements signed between developed and developing countries over the past decade. The sampling period also includes the revision of the European GSP in 2014, when several middle-income countries lost their preferential access to the European Union. In addition, in line with the results of [10], we are also examining the different potential effects of the two types of agreements on exports from industrialized countries to recipient countries. From an econometric point of view, we simultaneously control several sources of bias (concepts of multilateral resistance, unsuitable bilateral heterogeneity, heteroscid residue and zero trade flow), which is consistent with the current state of the art in the literature on the gravitational equation. The proliferation of non-reciprocal agreements undermines efforts to promote free trade, while reciprocal agreements promote trade because they do not intervene in the current international trading system (Bhagwati 2008; Mr. Ozden and Reinhardt, 2005). The random effect is considered less plausible because it starts from a zero correlation between the non-observable trade agreement and the preferential trade agreement (TPP). In addition, previous empirical studies show overwhelming evidence of the rejection of a random gravity model compared to a fixed-effect gravity model using either bilateral pairs or country-specific fixed effects (Baier and Bergstrand 2007; Egger 2000). I also do a Hausman test and find that the p value is 0.01, which implies the rejection of the random effects model in favor of the solid effect gravity model (Baltagi 2008). So far, the comparison between reciprocal and non-reciprocal trade agreements has been based on PTAs. However, as has already been said before multilateral trade liberalization under the gaTT/WTO, this approach is also reciprocal.

Empirical evidence of the impact of GATT/WTO in different groups of countries (developed towards development) is different ([37], [31], [23],[26], [38] and [28]). Empirical results range from negative effects on developing countries to positive effects for both groups. These include non-reciprocal trade agreements such as the GSP, the CPA, the EU`s latest “Everything but Arms” (EBA) initiative, the US Growth and Opportunity Act (AGOA), Cotonou and CBI. However, trade agreements, either reciprocal or non-reciprocal, are very different. For example, the free trade agreement between the United States and Morocco is very different from the PAFTA. As a result, the usual 0 and 1 mannequins cannot take into account such problems. A better way to remedy this situation is to use a measure that assigns different values to different types of trade agreements – with the other 0s and 1s – which naturally goes beyond the scope of this study.