When U.S. tariffs fell dramatically, global markets were also increasingly liberalized. Global trade has undergone a rapid transformation. The RTAA was a U.S. law, but it provided the first widely used system of guidelines for bilateral trade agreements. The United States and European nations began to avoid beggar neighborhood policies that pursued national trade objectives at the expense of other nations. Instead, countries have begun to realize the benefits of trade cooperation. RECIPROCAL TRADE AGREEMENTS. In June 1934, President Franklin D. Roosevelt`s Foreign Minister persuaded Congress to pass the Reciprocal Trade Agreements Act (RTAA) to increase U.S. exports at a time when the global depression had reduced international trade and many countries were increasing import tariffs.
This amendment to the Smoot-Hawley Customs Act of 1930 gave the President the power to enter into external trade agreements with other nations on the basis of a reciprocal reduction of functions. This meant abandoning the historic approach of making Congress import tariffs, usually at a high protectionist level. In addition, it is important to address the econometric problems that arise from both heterosticity and the existence of zero values in bilateral trade flows. It allows us to avoid other potential sources of distortions in the estimate that might be present in the login specification. This document benefits from the computer development recently implemented by  that allows PPML estimates, including the three types of high-dimensional fixed effects needed to become impartial, and theoretically consistent estimates. Column 1 of Table 3 presents GM estimates (2) with PPML. To save space, we report under each coefficient the two types of standard errors: grouped by pairs of countries (in parentheses) and standard errors grouped multi-way (in brackets). If we compare these results to those in Column 1 of Table 1, we can see that the transition from OLS to PPML results in a loss of statistical significance of all variables. At this point, it should be noted that the loss of importance of the estimated coefficients of both PTA and GATT variables, when we move from OLS to PPML, corresponds to the result found . Furthermore, as before , these authors also show a negligible result with regard to the commercial effect of the euro for the use of PPML, but not with regard to the use of OLS (including high-dimensional fixed effects in both cases). However, a notable difference between  and  securities in the use of the OLS lies in the fact that the former have a positive and significant effect on the euro, while the following has a negative and significant effect.
The gravitational equation has become the most important econometric approach for the ex-post study of the “partial” (or direct) impact of economic integration agreements on bilateral trade flows as a whole. After taking into account multilateral resistance conditions, with fixed effects that alter time and control of endogenous distortion using panel data techniques ,  find that free trade agreements significantly increase countries` bilateral trade flows using five-year data from 1960 to 2000 for 96 countries. After this empirical strategy and the same set of data,  goes even further by comparing the effects of North-South and South-South trade agreements on bilateral trade and showing that free trade agreements lead to an increase in bilateral trade, whether the signatory countries are developing or industrialized countries. In particular, they note that the percentage increase in bilateral trade is higher in the South-South agreements than in the North-South agreements. To preview our results, we find that the reported evidence varies according to specifications. However, according to our preferred specification, the PPML estimate, with the dependent variable in export shares, has had a positive impact on trade flows between developed and developing countries