Free trade agreements do not always diversify trade


About trade

Published: 04 Jul 2023

Do free trade agreements lead to more diversified trade? It depends on which partner you look at and how ambitious the agreement is.

The National Board of Trade has analysed 12 of the EU's free trade agreements and examined whether the agreements have contributed to a more diversified trade.

For the EU, the results suggests that the FTAs seem to have led to more diversified exports. The results also suggest that the presence of multiple provisions in the agreements contributes to the further diversification of EU exports.

For developing partner countries, however, we find no evidence that FTAs have contributed to diversify their export. The FTAs have thus in this regard been most beneficial for the EU.

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Do Provisions in Free Trade Agreements Diversify Trade? A first look at the extensive margin of trade