Who Liberalizes? Explaining Preferential Trade Liberalization

Despite the growth in research on preferential trade arrangements (PTAs), few studies have systematically explored why some PTAs have been more successful than others at liberalizing trade among members. In this paper I test four hypotheses concerning intra-PTA liberalization: a regional system structure hypothesis, an international institutions hypothesis, a domestic institutions hypothesis, and an economic hypothesis. Although all four types of variables are statistically significant, only international institutions have substantively large effects on intra-PTA liberalization. This suggests that policymakers have considerable latitude to promote integration, as the impact of “choice” variables such as international institutions far outweighs that of “given” factors such as regional system structure or the nature of member economies.