FGSES Professor Chahir Zaki will present his paper on mineral magnetism in the next AIRESS Research Seminar on Thursday, April 2nd at 12:30 p.m. This publication explores the determinants of trade agreements and examines how trade in critical minerals influences their depth, heterogeneity, and the inclusion of energy and mining provisions.

ABSTRACT:

The demand for critical minerals has been exponentially increasing in recent times. This was reflected by the proliferation of different deals and agreements . For instance, the Minerals Security Partnership (a coalition of 14 countries and the EU) aims to diversify and secure critical mineral supply chains. This paper bridges the gap between two strands of the literature. The first is related to the determinants of signing a trade agreement (Baier and Bergstrand, 2004 and Baier et al. 2014). The second pertains to the impact of critical minerals. While the effect of the latter has been analyzed energy transition, political alignment, and supply chain resilience, less work has been done on how they shape trade deals. To do so, using trade data from the BACI database (CEPII) and the Deep Trade Agreements database (World Bank), we apply a gravity type model (Yotov et al., 2016 and Larch and Yotov, 2024). We explore the heterogeneity of trade agreements (by type and by depth level) and of critical minerals (their concentration, level of processing and use in the digital and energy transition). We also consider how trade in critical minerals leads to the inclusion of provisions related to energy and mining and to deeper trade agreements measured at both the horizontal and vertical levels. The latter refers to whether trade agreements go beyond the simple tariff reduction (horizontal depth ) and whether they include legally enforceable provisions that deepen countries integration (vertical depth).