Tightening or Loosening? The Effects of Uncertainty on the Design of Preferential Trade Agreements
Journal: World Trade Review
Year: 2026

Abstract To mitigate uncertainty, it is often assumed that governments negotiate ample flexibility provisions when entering new international treaties. Yet, the case of preferential trade agreements (PTAs) suggests that governments prioritize the more stringent commitments when faced with uncertainty. In this paper, we investigate the effects of uncertainty spikes occurring during negotiations on the design of 251 bilateral PTAs. Our theory proposes that sharp increases in uncertainty make gover