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The new regionalism: trade liberalization or insurance?

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Author Info
Carlo Perroni
John Whalley

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Abstract

Several of the recently negotiated regional trade agreements contain significantly fewer concessions by the large countries to smaller countries than vice versa. In this paper, we compute post-retaliation Nash tariffs by region under various regional trade arrangements using a calibrated numerical general equilibrium model of world trade. Regional agreements constrain strategic behaviour within each trading area, and (in the Customs Union case) enhance it outside the bloc. Results confirm the intuition that without side payments large-small country regional agreements (such as the Canada-U.S. agreement) would not have occurred.

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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 33 (2000)
Issue (Month): 1 (February)
Pages: 1-24
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Handle: RePEc:cje:issued:v:33:y:2000:i:1:p:1-24

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Clinton R. Shiells & Kenneth A. Reinert, 1993. "Armington Models and Terms-of-Trade Effects: Some Econometric Evidence for North America," Canadian Journal of Economics, Canadian Economics Association, vol. 26(2), pages 299-316, May. [Downloadable!] (restricted)
  2. Nguyen, T.T. & Perroni, C. & Wigle, R.M., 1991. "The Value of a Uruguay Round Success," Working Papers 91151, Wilfrid Laurier University, Department of Economics.
  3. Markusen, James R & Wigle, Randall M, 1989. "Nash Equilibrium Tariffs for the United States and Canada: The Roles of Country Size, Scale Economies, and Capital Mobility," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 368-86, April. [Downloadable!] (restricted)
  4. Warner, Dennis & Kreinin, Mordechai E, 1983. "Determinants of International Trade Flows," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 96-104, February. [Downloadable!] (restricted)
  5. Gatsios, Konstantine & Karp, Larry, 1991. "Delegation Games in Customs Unions," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 391-97, April. [Downloadable!] (restricted)
    Other versions:
  6. John Whalley, 1984. "Trade Liberalization among Major World Trading Areas," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262231204.
  7. Kyle Bagwell & Robert Staiger, 1994. "Multilateral Tariff Cooperation During the Formation of Regional Free Trade Areas," International Trade 9410001, EconWPA. [Downloadable!]
    Other versions:
  8. Hamilton, Bob & Whalley, John, 1983. "Optimal tariff calculations in alternative trade models and some possible implications for current world trading arrangements," Journal of International Economics, Elsevier, vol. 15(3-4), pages 323-348, November. [Downloadable!] (restricted)
  9. John Kennan & Raymond Riezman, 1990. "Optimal Tariff Equilibria with Customs Unions," Canadian Journal of Economics, Canadian Economics Association, vol. 23(1), pages 70-83, February. [Downloadable!] (restricted)
  10. Alan Bollard & David Mayes, 1992. "Regionalism and the Pacific Rim," Journal of Common Market Studies, Blackwell Publishing, vol. 30(2), pages 195-210, 06. [Downloadable!] (restricted)
  11. Adams, F Gerard & Junz, Helen B, 1971. "The Effect of the Business Cycle on Trade Flows of Industrial Countries," Journal of Finance, American Finance Association, vol. 26(2), pages 251-68, May. [Downloadable!] (restricted)
  12. Thursby, Jerry G & Thursby, Marie C, 1984. "How Reliable Are Simple, Single Equation Specifications of Import Demand?," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 120-28, February. [Downloadable!] (restricted)
  13. Houthakker, Hendrik S & Magee, Stephen P, 1969. "Income and Price Elasticities in World Trade," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 111-25, May. [Downloadable!] (restricted)
  14. Nguyen, T.T. & Perroni, C. & Wigle, R.M., 1991. "The Value of a Uruguay Round Success," Working Papers 91151, Wilfrid Laurier University, Department of Economics.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Madanmohan Ghosh & Carlo Perroni & John Whalley, 1998. "The Value of MFN Treatment," NBER Working Papers 6461, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Limão, Nuno & Olarreaga, Marcelo, 2005. "Trade Preferences to Small Developing Countries and the Welfare Costs of Lost Multilateral Liberalization," CEPR Discussion Papers 5045, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Mette Ersbak Bang Nielsen, 2006. "The endogenous formation of sustanaible trade agreements," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO - FACULTAD DE ECONOMÍA. [Downloadable!]
  4. Adam, Antonis & Moutos, Thomas, 2002. "The Political Economy of EU Enlargement: Or, Why Japan is not a Candidate Country?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  5. Paul Brenton & Natalia Tourdyeva & John Whalley, 1997. "The potential trade effects of an FTA between the EU and Russia," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(2), pages 205-225, 06. [Downloadable!] (restricted)
  6. Caroline Freund, 2004. "Reciprocity in Free Trade Agreements," Working Papers Central Bank of Chile 279, Central Bank of Chile. [Downloadable!]
    Other versions:
  7. Paul Wonnacott & Ronald Wonnacott, 2004. "What's the Point of Reciprocal Trade Negotiations? Exports, Imports, and Gains from Trade," Middlebury College Working Paper Series 0419, Middlebury College, Department of Economics. [Downloadable!]
  8. John Whalley, 1996. "Why Do Countries Seek Regional Trade Agreements?," NBER Working Papers 5552, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Fernandez-Arias, Eduardo & Spiegel, Mark M., 1996. "North-South customs unions and international capital mobility," Policy Research Working Paper Series 1573, The World Bank. [Downloadable!]
    Other versions:
  10. Paolo Epifani & Juliette Vitaloni, 2003. "‘GATT-Think’ with Asymmetric Countries," CESPRI Working Papers 141, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Mar 2003. [Downloadable!]
    Other versions:
  11. Bond, Eric W & Syropoulos, Costas & Winters, L. Alan, 2000. "Deepening of Regional Integration and Multilateral Trade Agreements," CEPR Discussion Papers 2480, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  12. Madanmohan Ghosh & Carlo Perroni & John Whalley, 1999. "The Value of MFN Treatment to Developing Countries," UWO Department of Economics Working Papers 9907, University of Western Ontario, Department of Economics. [Downloadable!]
  13. Baldwin, Richard, 2008. "Big-Think Regionalism: a Critical Survey," CEPR Discussion Papers 6874, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  14. Fernandez, Raquel, 1997. "Returns to regionalism : an evaluation of nontraditional gains from regional trade agreements," Policy Research Working Paper Series 1816, The World Bank. [Downloadable!]
  15. Nuno Limão, 2002. "Are Preferential Trade Agreements with Non-trade Objectives a Stumbling Bloc for Multilateral Liberalization?," International Trade 0206001, EconWPA. [Downloadable!]
    Other versions:
  16. Winters, L. Alan, 1996. "Regionalism versus multilateralism," Policy Research Working Paper Series 1687, The World Bank. [Downloadable!]
  17. Eduardo Fernández-Arias & Mark M. Spiegel, 1997. "Uniones aduaneras norte-sur y movilidad internacional del capital," RES Working Papers 4061, Inter-American Development Bank, Research Department. [Downloadable!]
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