provision dummies indicating the presence of each policy area in RTAs by country-pair-year, and take the maximum value of each provision dummy across multiple RTAs (if any) within each country-pair-year combination.

As a second step, we construct several measures of RTAs’ depth based on the provisions included in the trade agreement that each country pair shares in a given year. Specifically, we consider different count variables, differentiating by type of provision: (i) number of provisions (independently of their legal enforceability), (ii) number of legally enforceable provisions (i.e. whose implementation is supported by strong legal language and by the availability of a dispute settlement mechanism), (iii) number of WTO-plus provisions (WTO+) – i.e. provisions covered by the current mandate of the WTO, (iv) the number of WTO-extra provisions (WTO-X) – i.e. provisions not covered by the current mandate of the WTO, and (iv) number of core provisions – i.e. provisions directly related to trade enhancing factors.<sup>4</sup> While in our empirical exercise, we use all these proxies for the depth of RTAs, our baseline measure of RTA depth is the count of legally enforceable provisions in each RTA.<sup>5</sup> The simple count of provisions in RTAs gives equal weight to each clause included in the agreement, and one may want to give more weight to “rare” provisions (i.e. provisions included less frequently in RTAs and likely to signal stronger market integration). To address this concern, as a robustness check, we also use alternative measures of RTA depth based on the weighted sum of provisions (using one minus the frequency to which each provision appears in the 300 RTAs covered by the DTA database).<sup>6</sup> One drawback of the DTA database is that it does not cover RTAs that are no longer in force.<sup>7</sup> So, when controlling for the presence of an RTA between two countries (see section 4), we complement the DTA database with the CEPII data covering active and inactive RTAs. The _RTA adjusted_ dummy is equal to one if a RTA is observed (from CEPII and/or DTA dataset) and zero otherwise. As for the depth of RTAs not mapped in the DTA database, we construct two proxies of depth. First, we (arbitrarily) set the depth measures for these RTAs as equal to

> 4See Horn et al. (2010) for definition of WTO+ and WTO-X provisions. Core provisions are defined in Hofmann et al. (2017) and include all WTO+ provisions plus clauses that regulate competition policy, bilateral investment, movement of capital and intellectual property rights.

> 5It should be noted that in this paper we aim to capture the impact of the _overall_ depth of RTAs on firms with different characteristics. Different provisions in trade agreements, however, have different effects on aggregate trade outcomes (Fernandes et al., 2021) and are likely to have heterogeneous effects on firms’ exports. For example, provisions that lower fixed entry costs on the destination market, such as provisions aimed at improving trade facilitation or reducing regulatory divergence, can make it easier for small firms to export. Fernades et al. (2021) finds some preliminary evidence of this focusing on provisions on technical and sanitary standards in trade agreements involving a sample of Latin American countries. Other provisions may have just the opposite effect. For instance, requirements in DTAs to meet higher environmental or labor standards could make it easier for larger exporters relative to smaller firms to export in the destination market, reinforcing the competition effect that we stress in this paper.

> 6In Figure A1 we show how frequently each provision is included in Regional Trade Agreements.

> 7The World Bank provides information on the content of RTAs active in the year of the creation of the DTA database. RTAs that were active in the past, but inactive at the time of the creation of the database are not covered.

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