the SITC data into standard System of National Accounts (SNA) categories of per the Broad Economic Categories (BEC) classification system.<sup>9</sup> Data for EIAs come from two primary sources. We make use of the World Trade Institute Design of Trade Agreements (DESTA) dataset as a primary data source, which comprises information on 601 bilateral, regional, and multi-lateral agreements for the period 1961-2013. One of the advantages of this dataset is that it provides information on EIAs across several dimensions: type of agreement, depth of agreement,<sup>10</sup> and type of provisions referenced in the text of each agreement (partitioned into seven categories).<sup>11</sup> Our binary EIA variable is equal to unity if the agreement is a partial scope agreement, full FTA, customs union, or services agreement. We exclude framework agreements, as these are extremely shallow and do not contain any specific provisions. The DESTA variable for depth is an additive index that ranges from zero to seven where each bump up the index represents an additional category of substantive provisions that is included in the agreement.<sup>12</sup> We disaggregate this into seven dummy variables to be used as controls, where each dummy corresponds to a different category of provisions.

As a secondary dataset on EIAs and EIA depth, we also make use of an updated version of the BBF (2014) dataset. In short, this dataset provides an index of bilateral and regional EIAs for years 19602011, ranked from 1-6, where 1 represents the shallowest form of integration agreement (one-way preferential trade agreement) and 6 represents the deepest form of EIA (economic union). Our binary EIA variable used in this analysis is equal to unity if two countries have a two-way preferential trade agreement (TWPTA) or any deeper agreement, and zero otherwise. Results using this specification are presented in Appendix 1.

Data used to construct variables for economic proximity used in robustness checks and further defined below—namely the exporters’ and importers’ real GDP per capita at current PPPs—come from the Penn World Table version 8.1. Lastly, publically available data on bilateral geographic distance were downloaded from CEPII.

# _<u>2.3 Main gravity specifications for aggregate and disaggregate exports</u>_

Log-linearizing equation (4) and applying exporter-time, importer-time and country-pair fixed effects to minimize the potential biases associated with omitted variables affecting trade and EIAs yields our baseline gravity equation. This approach closely follows that used in BBF, which relies on the well-documented fact that using a panel dataset is the most appropriate method to tease out the endogenous relationship between trade agreements and trade flows (see for example Baier and Bergstrand (2007) and references therein). As such, the baseline equation we estimate and use to verify the results in BBF is written as:

> 9 See Appendix 2 for further details about the BEC classification system and how SITC Rev. 2 4-digit products were mapped to BEC categories.

> 10 The DESTA dataset includes two depth measures: a depth index and a depth variable based on explanatory factor analysis. Here, we rely on the depth index although both variables are highly correlated. There are also more than 601 bilateral agreements included in the full version of the dataset. Since we exclude very shallow framework agreements, we use 601 in our analysis.

> 11 The first provision category covers whether the agreement reduces tariffs to zero. The remaining six categories of substantive provisions encompass: services; investments; standards; public procurement; competition; and intellectual property rights. Additional information can be found in Dür _et al._ (2014).

> 12 This analysis does not explore which EIA provisions are the most trade-creating.

6