DTA content and GVC integration in Latin America and the Caribbean

Global analysis suggests that the increased role of GVCs in recent decades has been accompanied by an increase in PTAs regulating trade facilitation, nontariff measures such as SPS and TBTs, and services (figure 2.13). This is not surprising, given that these policy priorities could potentially help countries to overcome disadvantages related to geography, market size, factor endowments, and institutions that limit their participation in GVCs (as further discussed in chapter 1).

The depth and content of those regulations tend to be higher in agreements signed by countries that are integrated into more sophisticated GVCs (figure 2.14). This suggests that the agreements might serve as a mechanism for countries to undertake domestic reforms in policy areas that are key to the fundamental determinants of GVC integration. The next chapters of this report analyze in depth the links between geography, market size, factor endowments, institutions and trade, and GVC integration in Latin America and the Caribbean.

Figure 2.13 Average coverage ratio of selected policy areas in new PTAs globally, by decade

Average coverage ratio (%) 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0

1990–99 2000–09 2010–17

Trade facilitation Nontariff measures Services Competition policy Source: World Bank’s Deep Trade Agreements database. Note: Coverage ratio refers to the share of provisions for each policy area contained in a given preferential trade agreement (PTA) divided by the maximum number of provisions in that policy area. Years refer to entry-into-force date. The figure excludes partial scope agreements, as well as the European Union agreement and enlargements.