I consider the trade between RTAs members (and with
the ROW) even before the implementation of the agreements, in order to look for
break points around the important dates of the agreements (and notably before and
after the implementation date). Actually, it is likely that an increase in trade between
members a few years just before the official implementation of an agreement would
signal an ‘‘anticipation effect’’. Moreover, even with specific country-pair effects in
the specification, one cannot be sure to capture all specific links between members
(other than the agreement) that can influence intra-RTA trade (in particular if these
links evolve with time). Hence, it is necessary to look at intra-RTA trade before the
implementation of the agreement to avoid an ‘‘artificial break point’’ and hence
attribute a wrong interpretation to the regional dummy coefficient. Therefore, the
ARTICLE IN PRESS
230 C. Carre`re / European Economic Review 50 (2006) 223–247
regional dummies capture the trade between RTAs members