Impact of Deep Regional Trade Agreements on Foreign Direct Investment:Evidence From 224 Economies

Following the continuous deepening of Regional Trade Agreements (RTAs), a key question arises: How does the deepening of RTAs reshape the location-selection logic of Foreign Direct Investment (FDI)? Using panel data for 224 global economies from 2009 to 2022, this study systematically examines the impact of deep RTAs on FDI. The study finds that deep RTAs significantly promote FDI inflows through three mechanisms: optimizing the investment environment, reducing trade costs, and rule competition. Specifically, for every 1% increase in World Trade Organization (WTO) + provisions, WTO-X provisions, and number of revisions, FDI increases by 0.468%, 0.786%, and 1.031%, respectively. The study reveals significant heterogeneous effects: Key provisions such as "visa and protection" and "institutional framework and transparency" promote FDI significantly, and the promoting effect of cooperation between South-South countries is the strongest. The extended analysis shows that an increase in the number of RTAs generally enhances FDI attractiveness; however, this promoting effect gradually decreases over time, and neighboring countries' RTAs cause an investment transfer effect. In addition, only when the deepening degree of RTAs is in the top 10% can it significantly increase FDI inflows, with an average increase of up to 25.9%. This study provides empirical support for the high-quality promotion of regional economic and trade cooperation and offers policy references for signing and deepening the path design of RTAs.
 

White House: China to relax existing export controls, lift ag tariffs

China has agreed to relax export control on gallium, germanium, graphite and antimony, lift retaliatory tariffs on U.S. agricultural products and allow semiconductor producer Nexperia to resume exporting its chips, the White House said on Saturday, outlining new details on the deal struck by President Trump and Chinese President Xi Jinping earlier in the week.

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