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Harmonizing External Quotas in a FTA: A Step Backward?

Author

Listed:
  • Cadot, Olivier
  • de Melo, Jaime
  • Olarreaga, Marcelo

Abstract

This paper explores how political-economy forces shape quantitative barriers against the rest of the world in a FTA. We show that whereas the dilution of lobbying power in a FTA typically leads to a relaxation of external quotas, this result is likely to be overturned as integration deepens. In particular, we show that cooperation among member countries on the level of their external quotas, cross-border lobbying by import-competing interests in the free-trade area and the consolidation of national external quotas into a single one, all lead to stiffer restrictions against imports from the rest of the world. We also show that unlike tariffs, endogenous quotas are not crucially affected by the presence of rules of origin.

Suggested Citation

  • Cadot, Olivier & de Melo, Jaime & Olarreaga, Marcelo, 1998. "Harmonizing External Quotas in a FTA: A Step Backward?," CEPR Discussion Papers 2002, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2002
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    Cited by:

    1. Hamanaka, Shintaro, 2012. "Evolutionary paths toward a region-wide economic agreement in Asia," Journal of Asian Economics, Elsevier, vol. 23(4), pages 383-394.
    2. PERJU, Genoveva Elena, 2009. "Retaliatory disagreement point with asymmetric countries. Evidence from European wine sector during enlargement," MPRA Paper 17757, University Library of Munich, Germany, revised 03 Oct 2009.

    More about this item

    Keywords

    FTA; Political Economy; Quotas;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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