During the last two decades, the number of preferential trade agreements (PTAs) grew almost exponentially to over 270 by 2010. A majority of these are agreements between developed and developing countries. Existing models provide little economic rationale for these agreements, but the existing literature lumps North-South PTAs together with other types of trade pacts. This article offers an explanation focused on the movement of less capital-intensive manufacturing from North to South, which in turn stimulates the exchange of similar goods differentiated by unit value—also referred to as vertical intra-industry trade. The North exports more capitalintensive goods, while more labor-intensive goods are produced and traded by the South. This kind of specialization creates incentives for governments to support PTAs. The author tests this model using a new measure of vertical trade specialization and finds strong evidence that such specialization promotes PTA formation. North-South PTAs should therefore be seen as part of a broader shift of manufacturing from high- to middle-income countries.

The proliferation of preferential trade agreements (PTAs) and the wave of democratization are among the most significant developments in international relations during the past three decades. The correlation between these is well noted. The causal link between these phenomena, however, remains unclear. On one hand, democracies have been found to be more likely to join PTAs. On the other hand, trade agreements should foster democratization because they undermine the ability of governments to distribute rents to maintain an autocratic regime. If PTAs and democracy coevolve through a selection and a contagion effect, then conventional statistical techniques can produce wholly misleading results. This article presents a new approach based on recent advancements in longitudinal network analysis. Our findings confirm that historically, democratization indeed made states more likely to sign PTAs, but that trade agreements also encourage the democratization of a country, in particular if the PTA partners are themselves democracies.

(10119 words including references and notes) Why do major economic powers seek more and more free trade agreements (FTAs) with smaller partners? Recently, Japan has joined the bandwagon by signing its first bilateral FTA. The decision, highly contested domestically, represents a sea change in Japanese trade policy and a challenging case for theories of regionalism. This paper lays out a theoretical appraisal for why more and more industrialized countries join FTAs with emerging markets and illustrates the argument with an analysis of the Japanese case. The paper argues that foreign direct investment (FDI) changes the incentives for states in favour of preferential trade agreements. Increased FDI and shifts in multinational firm strategies increase flows of intermediate goods. As a result, firms lobby their home governments to bolster their competitive position by signing preferential agreements. Yet, FTAs also discriminate against firms from third parties, motivating them to lobby for defensive agreements. The qualitative case studies show how NAFTA discriminates against Japanese FDI in Mexico. As a result, firms began to lobby the Japanese trade bureaucracy, changing the perception of key policymakers who developed a strategy of pursuing preferential trade agreements in the Asia Pacific region, as shown in a case study of the initiative for an FTA with Thailand.

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Why do developing countries negotiate North-South trade agreements, when they already enjoy preferential market access to developed-country markets? Most developing countries benefit from the generalized system of preferences (GSP) and related schemes when they export to the United States, the EU, and other developed economies. And yet, many pursue fully reciprocal agreements that require major concessions to the developed partner. We argue that this is due to the nature of the GSP as a unilateral concession that can be (and often is) taken away. High dependence on unilateral, removable preferences generates "political trade dependence" (PTD). We distinguish PTD from standard measures of trade dependence, and we explain why PTD motivates developing countries to seek North-South Regional Trade Agreements (RTAs). We show the effects of PTD with a selection of illustrative cases and test our hypothesis on a data set of EU and US trade agreements with developing countries. We find robust statistical support for our hypothesis that high and rising levels of PTD make the negotiation of a North-South RTA more likely.2 GATT Art. 24, which establishes the legal groundwork for bilateral trade agreements, requires the elimination of duties "with respect to substantially all the trade." Most observers refer to reciprocal preferential trade agreements as "preferential trade agreements." However, to make a clear distinction between preferential programs such as the GSP and reciprocal trade agreements under Art. 24 of the GATT, we refer to the latter as "regional trade agreements" in line with WTO terminology-even though we are clearly not referring to regions in a geographical sense.International Studies Quarterly (2014) 58, 79-91