Julian Maluck, Nicole Glanemann, Reik V. Donner

Free trade agreements have received rising attention in the last decades, with trade deals having been negotiated at an increasing pace. Multi-regional input-output (MRIO) tables allow for a concise analysis of trade relations between industries both at the national and international level. By evaluating an industry’s dependency on its consuming and supplying industries from MRIO data, we construct two networks depicting the output and input flow of intermediate goods, respectively. We present how complex network theory allows for the design of a dependency measure between two countries that takes higher order dependencies in supply chains into account. In the constructed flow networks, the dependency measure is based on path probabilities that track the flow of goods and money in the network and model the relative importance of hypothetical supply chains. By analyzing its time evolution for each pair of trade agreement partners, we present a reliable method to quantify short-term impacts on the economies of the countries involved in various Regional Trade Agreements. We show that different countries show distinctive negotiation profiles that either have resulted from different objectives and interests during the trade negotiation process or might indicate that some parties could not achieve their objectives at the negotiation of the agreement. To further investigate an agreement’s impact for a country’s economic structure, we compare the impact on both the export and import dependency on the economy of the agreement partner. An analysis of the resulting import/export asymmetry profiles can reveal a country’s strategy in adjusting the trade balance through trade agreement negotiations. Next to a comprehensive overview on the impacts of Regional Trade Agreements, our results provide the basis for further detailed studies on the implications of specific design patterns and strategies within trade agreements.