{"681077":{"#nid":"681077","#data":{"type":"news","title":"Trade Agreements Keep Global Economies Stable","body":[{"value":"\u003Cp\u003EInternational trade relationships have kept the global economy running since ancient times. In the last 40 years, the processes and regulations governing international trade have become more organized and structured. Now countries create trade agreements to establish standards for which countries can freely trade without tariffs and other barriers. However, these agreements aren\u2019t always permanent. New \u003Ca href=\u0022https:\/\/onlinelibrary.wiley.com\/doi\/full\/10.1111\/roie.12792\u0022\u003Eresearch\u003C\/a\u003E from Georgia Tech can predict the stability of trade relationships between countries.\u003C\/p\u003E\u003Cp\u003EAccording to\u0026nbsp;\u003Ca href=\u0022https:\/\/econ.gatech.edu\/\u0022\u003ESchool of Economics\u003C\/a\u003E Professor\u0026nbsp;\u003Ca href=\u0022https:\/\/econ.gatech.edu\/people\/person\/tibor-besedes\u0022\u003ETibor Besedes\u003C\/a\u003E, there are two broad types of trade agreements: shallow and deep. Shallow agreements, such as reducing tariffs, are straightforward. The United States-Mexico-Canada Agreement\u0026nbsp;\u2014\u0026nbsp;a trade agreement between the U.S. and its northern and southern neighbors is shallow because it focuses on reducing tariffs. Conversely, a deep agreement is more comprehensive and involves integration between countries\u2019 economic systems.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cOften in deep agreements, countries start to harmonize standards; for example, car emission regulations are identical across all the countries signing the agreement, which makes it easier for goods to travel between borders,\u201d Besedes said.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EThe European Union (EU) is a textbook example of a deep agreement. The EU countries\u2019 level of integration extends to their basic currency, ensuring all EU members use the euro and making trade easier.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003EUsing the United Nations commodity trade database and Baier and Bergstrand\u2019s trade agreements database \u2014 some of the most comprehensive datasets in the field \u2014 the researchers created a mathematical model to determine whether trade depth affects stability. The results were surprising. While both deep and shallow agreements result in less stable relationships, the effects of shallow agreements are larger than deep ones. Though both types of agreements allow firms to experiment in international trade because costs are reduced, those experiments often fail and create some instability that can lead to dissolution. Think of Brexit, when the U.K. left the EU in 2020.\u003C\/p\u003E\u003Cp\u003E\u201cShallow agreements reduce the cost of trading,\u201d Besedes noted. \u201cWhen a country signs a trade agreement, it reduces tariff rates. That reduces the cost of trading in the long run because the country has already established that relationship, and it\u2019s now even easier to trade future products.\u201d\u003C\/p\u003E\u003Cp\u003ETrade agreements generally last years, though some long-established international agreements may change in the current political climate.\u0026nbsp;\u003C\/p\u003E\u003Cp\u003E\u201cTariffs going up could make existing relationships less stable, and it\u2019s more likely that we\u2019ll stop trading a particular product or stop importing product,\u201d Besedes said. \u201cOn the flip side, it also means that other countries could impose tariffs on the U.S., and there will be less of an opportunity for American businesses to export their products.\u201d\u003C\/p\u003E\u003Cp\u003EWhile no one can fully predict how global trade relationships will change in the coming years, the stability the world has come to expect could be a thing of the past.\u0026nbsp;\u003C\/p\u003E","summary":"","format":"limited_html"}],"field_subtitle":"","field_summary":[{"value":"\u003Cp\u003E\u0026nbsp;New research shows how different trade agreements impact the global economy.\u003C\/p\u003E","format":"limited_html"}],"field_summary_sentence":[{"value":" New research shows how different trade agreements impact the global economy."}],"uid":"34541","created_gmt":"2025-03-11 18:37:10","changed_gmt":"2025-03-18 14:36:30","author":"Tess Malone","boilerplate_text":"","field_publication":"","field_article_url":"","location":"Atlanta, GA","dateline":{"date":"2025-03-11T00:00:00-04:00","iso_date":"2025-03-11T00:00:00-04:00","tz":"America\/New_York"},"extras":[],"hg_media":{"676518":{"id":"676518","type":"image","title":"Tibor-Besedes-030725-1.jpg","body":"\u003Cp\u003EPhoto by Christopher McKenney\u003C\/p\u003E","created":"1741718307","gmt_created":"2025-03-11 18:38:27","changed":"1741718307","gmt_changed":"2025-03-11 18:38:27","alt":"Tibor Besedes","file":{"fid":"260319","name":"Tibor-Besedes-030725-1.jpg","image_path":"\/sites\/default\/files\/2025\/03\/11\/Tibor-Besedes-030725-1.jpg","image_full_path":"http:\/\/hg.gatech.edu\/\/sites\/default\/files\/2025\/03\/11\/Tibor-Besedes-030725-1.jpg","mime":"image\/jpeg","size":10141352,"path_740":"http:\/\/hg.gatech.edu\/sites\/default\/files\/styles\/740xx_scale\/public\/2025\/03\/11\/Tibor-Besedes-030725-1.jpg?itok=gOpIfTTE"}}},"media_ids":["676518"],"groups":[{"id":"1281","name":"Ivan Allen College of Liberal Arts"},{"id":"1214","name":"News Room"},{"id":"1188","name":"Research Horizons"}],"categories":[],"keywords":[{"id":"187915","name":"go-researchnews"}],"core_research_areas":[],"news_room_topics":[{"id":"106361","name":"Business and Economic Development"}],"event_categories":[],"invited_audience":[],"affiliations":[],"classification":[],"areas_of_expertise":[],"news_and_recent_appearances":[],"phone":[],"contact":[{"value":"\u003Cp\u003ETess Malone, Senior Research Writer\/Editor\u003C\/p\u003E\u003Cp\u003Etess.malone@gatech.edu\u003C\/p\u003E","format":"limited_html"}],"email":[],"slides":[],"orientation":[],"userdata":""}}}