The 'Deeper' and the 'Wider' EU Strategies of Trade Integration : An Empirical Evaluation of EU Common Commercial Policy Effects

Since the post war period, the EU Common Commercial Policy (CCP) has moved in twodirections mainly through Preferential Trade agreements (PTAs): a deeper (internal) trade integrationprocess intended to reinforce trade relations among European countries (i.e. CustomUnion, Single Market, European Monetary Union, Enlargement Process), and a wider (external)integration process intended to reinforce trade relations with third countries.Surprisingly, there are very few empirical studies in the literature which specifically quantify theeffects of the overall EU PTAs on the European countries' trade flows. This paper seeks to fillthis gap by conducting an empirical investigation on whether and how the CCP had a significantimpact on European countries' imports. It adopts an extended version of the gravity model. In linewith recent studies, it uses a Hausman Taylor estimator, controls for heterogeneity and includes aset of variables to proxy for the multilateral trade resistance indexAccording to our results, the EU free trade area has been a successful experiment in tradeliberalisation. However, the positive and significant coefficient of PTAs signed by the EU withthird countries may somehow have limited the occurrence of trade diversion effects. Indeed, thecoefficient of the trade diversion dummy is significant but relatively small