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A New Trade Theory of GATT/WTO Negotiations

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Author Info
Ralph Ossa
Abstract

I develop a novel theory of GATT/WTO negotiations. This theory provides new answers totwo prominent questions in the trade policy literature: first, what is the purpose of tradenegotiations? And second, what is the role played by the fundamental GATT/WTO principlesof reciprocity and nondiscrimination? Relative to the standard terms-of-trade theory ofGATT/WTO negotiations, my theory makes two main contributions: first, it builds on a 'newtrade' model rather than the neoclassical trade model and therefore sheds new light onGATT/WTO negotiations between similar countries. Second, it relies on a productionrelocation externality rather than the terms-of-trade externality and therefore demonstratesthat the terms-of-trade externality is not the only trade policy externality which can beinternalized in GATT/WTO negotiations.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0877.

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Date of creation: Jun 2008
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Handle: RePEc:cep:cepdps:dp0877

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Related research
Keywords: Trade negotiations; GATT/WTO; New trade theory;

Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

This paper has been announced in the following NEP Reports:

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