Are the EU trade preferences really eective? A Generalized Propensity Score evaluation of the Southern Mediterranean Countries' case in agriculture and shery

The aim of this work is to assess the trade impact of preferential schemes in agriculture and shery granted by the European Union (EU) to the Southern Mediterranean Countries (SMCs). This analysis presents several methodological improvements to previous works. First of all, we rely on a continuous treatment - i.e., preferential margins - to capture the \average treatment eect" of trade preferences rather than on a binary treatment based on dummy variables. Second, we apply non parametric matching techniques for continuous treatment, namely a generalized propensity score matching (GPS) technique, to assess the average causal eects of preferences on trade ows. Third, we use highly disaggregated data at sectoral level in order to evaluate properly the preferential treatment which is conceived to be applied at the product level. Our results show how the impact of EU preferences in agriculture and shery granted to SMCs is positive and signicant and better evaluated using impact evaluation techniques. We also assess the functional form of the relationship between EU-SMCs preferences and bilateral trade ows as well as the optimal level of preferential margin above which the marginal impact decreases.