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Free trade agreements without delocation

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Author Info
Richard E. Baldwin
Frederic Robert-Nicoud

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Abstract

Small nations fear that FTAs with larger, richer nations will erode their industrial bases. These concerns are recognized in FTA and multilateral talks: small nations may explicitly or implicitly maintain higher trade barriers. Using a model where symmetric liberalization de-industrializes small, poor nations, we characterize the path of protection-asymmetries that allow liberalization without delocation. In welfare terms, the large nation prefers this no-delocation liberalization scheme only when barriers are sufficiently high; the small nation's ranking is reversed. An anti-delocation scheme involving international income transfers is also evaluated and found infeasible.

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File URL: http://economics.ca/cgi/xms?jab=v33n3/10.pdf
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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): 3 (August)
Pages: 766-786
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Handle: RePEc:cje:issued:v:33:y:2000:i:3:p:766-786

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(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. Fugazza, Marco & Robert-Nicoud, Frédéric, 2006. "Can South-South Trade Liberalisation Stimulate North-South Trade?," CEPR Discussion Papers 5699, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Thede, Susanna, 2007. "Trade and Agglomeration: the Strategic use of Protection Revisited," Working Papers 2007:7, Lund University, Department of Economics. [Downloadable!]
  3. Susanna Thede, 2005. "Trade Policy Formation when Geography Matters for Specialisation," Working Papers 200519, School Of Economics, University College Dublin. [Downloadable!]
  4. Ralph Ossa, 2008. "A New Trade Theory of GATT/WTO Negotiations," CEP Discussion Papers dp0877, Centre for Economic Performance, LSE. [Downloadable!]
  5. Volker Nocke, 2003. "A Gap for Me: Entrepreneurs and Entry," PIER Working Paper Archive 05-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 29 Sep 2005. [Downloadable!]
    Other versions:
  6. Frédéric Robert-Nicoud & Federica Sbergami, 1999. "Endogenous Regional Policy in a Model of Agglomeration," HEI Working Papers 02-2001, Economics Section, The Graduate Institute of International Studies. [Downloadable!]
  7. Frédéric Robert-Nicoud, 2006. "Agglomeration and Trade with Input--Output Linkages and Capital Mobility," Spatial Economic Analysis, Taylor and Francis Journals, vol. 1(1), pages 101-126, June. [Downloadable!] (restricted)
  8. Monika Mrazova, 2009. "Trade negotiations when market access matters," Economics Series Working Papers 447, University of Oxford, Department of Economics. [Downloadable!]
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