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Mutual Recognition Agreements and Trade Diversion: Consequences for Developing Nations

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Abstract

This paper presents a baseline model that illustrates the implications of Mutual Recognition Agreements (MRAs) for excluded nations. The model shows that MRAs can harm third country exports because of a trade-diversion effect. We use highly disaggregated trade data from developed and developing nations to test whether or not MRAs have a negative effect on exports from excluded nations. In particular, we focus on the impact of a North-North MRA on the South. We find empirical evidence in support of the model; the MRA between the EU and the USA has harmed exports from Canada and the group of developing countries included in the study.

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File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIWP20-2006.pdf
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Bibliographic Info

Paper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 20-2006.

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Length: 30
Date of creation: 26 Oct 2006
Date of revision: Jun 2007
Handle: RePEc:gii:giihei:heiwp20-2006

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Keywords: International Economics; economic integration; Trade Policy; economic development; mutual recognition agreements; MRA; standards; trade diversion; zeros; cournot; quality; inspection; Canada; Mexico; USA; EU; European Union; FTA; TBT; regionalism;

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References

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  1. Maggie X. Chen & Aaditya Mattoo, 2008. "Regionalism in Standards: Good or Bad for Trade?," Working Papers 2009-14, The George Washington University, Institute for International Economic Policy.
  2. John C. Harsanyi, 1967. "Games with Incomplete Information Played by "Bayesian" Players, I-III Part I. The Basic Model," Management Science, INFORMS, vol. 14(3), pages 159-182, November.
  3. Riezman, Raymond G., 1990. "Dynamic Tariffs with Asymmetric Information," Working Papers 720, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Lutz, Stefan, 1996. "Trade Effects of Minimum Quality Standards with and without Deterred Entry," CEPR Discussion Papers 1384, C.E.P.R. Discussion Papers.
  5. Harsanyi, John C, 1995. "Games with Incomplete Information," American Economic Review, American Economic Association, vol. 85(3), pages 291-303, June.
  6. Suwa Eisenmann, Akiko & Verdier, Thierry, 2002. "Reciprocity and the Political Economy of Harmonization and Mutual Recognition of Regulatory Measures," CEPR Discussion Papers 3147, C.E.P.R. Discussion Papers.
  7. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
  8. Green, Edward J. & Porter, Robert H., 1982. "Noncooperative Collusion Under Imperfect Price Information," Working Papers 367, California Institute of Technology, Division of the Humanities and Social Sciences.
  9. Alberto Amurgo Pacheco, 2006. "Institutions and Deep Integration," IHEID Working Papers 07-2006, Economics Section, The Graduate Institute of International Studies.
  10. Maskus, Keith E. & Wilson, John S. & Tsunehiro Otsuki, 2000. "Quantifying the impact of technical barriers to trade : a framework for analysis," Policy Research Working Paper Series 2512, The World Bank.
  11. Richard Baldwin & Daria Taglioni, 2006. "Gravity for Dummies and Dummies for Gravity Equations," NBER Working Papers 12516, National Bureau of Economic Research, Inc.
  12. Jacques Pelkmans, 2003. "Mutual Recognition in Goods and Services: An Economic Perspective," Economics Working Papers 016, European Network of Economic Policy Research Institutes.
  13. Baldwin, Richard, 2000. "Regulatory Protectionism, Developing Nations and a Two-Tier World Trade System," CEPR Discussion Papers 2574, C.E.P.R. Discussion Papers.
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Cited by:
  1. Olivier Cadot & Anne-Célia Disdier & Lionel Fontagné, 2012. "North-South Standards Harmonization and International Trade," PSE Working Papers hal-00961733, HAL.
  2. Olivier CADOT & Anne-Cécilia DISDIER & Lionel FONTAGNÉ, 2012. "North-South Standards Harmonization and International Trade," Working Papers P42, FERDI.
  3. Matthew Shearer & Juliana Salles Almeida & Carlos H. Gutiérrez Jr., 2009. "The Treatment of Agriculture in Regional Trade Agreements in the Americas," IDB Publications 26158, Inter-American Development Bank.
  4. Matthew Shearer & Juliana Salles Almeida & Carlos H. Gutiérrez Jr., 2009. "The Treatment of Agriculture in Regional Trade Agreements in the Americas," IDB Publications 23538, Inter-American Development Bank.
  5. repec:hal:journl:hal-00975529 is not listed on IDEAS

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