Venice Summer Institute 2014: Regional Mega Deals: New Trends, New Models, New Insights?

A new generation of preferential trade agreements (PTAs) is in the making: larger and deeper than most that have been signed earlier. Their focus has moved away from the elimination of tariffs to regulatory cooperation and a WTO-Plus agenda. At the same time, theoretical and empirical modelling of PTAs has changed, too. Impressive efforts have been made to catalogue and measure non-tariff barriers (NTBs), incorporate them into CGE models and analyse reform scenarios. An improved understanding of the theoretical foundations of the gravity model and advances in econometric methodology have allowed a clearer understanding of trade costs in general and of the trade cost reducing effects of PTAs, in specific. With the emergence of new quantitative trade theory, the empirical gravity and the CGE literatures have started to converge. Finally, the availability of more detailed data has made it possible to assess the economic, social, and environmental implications of freer trade and of PTAs.
Nonetheless, a large number of important questions remain. They relate, e.g., to an even deeper integration of data and econometric methods, to a micro-founded inclusion of frictional unemployment, inequality and investment into the frameworks, to measurement issues relating to services trade or to the quantification of NTBs, to the relationship between PTAs and multilateral trade liberalization, to the political economy of formation of PTAs, and to many more. One objective of the workshop is to provide insights on these issues. A second aim is to provide ex post evidence on the effects of PTAs, ideally based on novel modelling approaches, or to offer ex ante quantitative assessment of the big PTAs that are currently in the making (such as the Transatlantic Trade and Investment Partnership or the Transpacific Partnership) or that have been recently concluded (such as the Pacific Alliance).