The direct and relative effects of preferential market access

The proliferation of preferential trade agreements has resulted in a complex system of preferences in which market access conditions are often discriminatory. In this paper we investigate how market access conditions have evolved between 2000 and 2009, and how this has affected international trade. Our results show that the proliferation of preferential access has increased bilateral trade not only due to lower tariffs but also because preferential access often resulted in higher preferential margins vis-à-vis foreign competitors. The results also indicate that the evolution of the system of preferences has been disadvantageous for countries that did not actively engage in forming new trade agreements.