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Are Trade Agreements Good For You?

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  • Giovanni Maggi
  • Ralph Ossa

Abstract

We examine how deep agreements on domestic regulations affect welfare in a world where such agreements are influenced by producer lobbies. The answer to this question depends in a critical way on whether the agreement focuses on product standards or on production regulations. International cooperation on product standards can decrease welfare, and this is more likely to happen when producer lobbies are stronger. On the other hand, international cooperation on production regulations tends to enhance welfare when lobbying pressures are strong. A key determinant of the welfare impact of deep agreements is whether the interests of producer lobbies in different countries are aligned or in conflict: the former situation tends to occur in the case of product standards, while the latter situation tends to occur in the case of production regulations.

Suggested Citation

  • Giovanni Maggi & Ralph Ossa, 2020. "Are Trade Agreements Good For You?," NBER Working Papers 27252, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27252
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    References listed on IDEAS

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    3. Gene M. Grossman & Phillip McCalman & Robert W. Staiger, 2021. "The “New” Economics of Trade Agreements: From Trade Liberalization to Regulatory Convergence?," Econometrica, Econometric Society, vol. 89(1), pages 215-249, January.
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    9. Devashish Mitra, 2016. "Endogenous political organization and the value of trade agreements," World Scientific Book Chapters, in: The Political Economy of Trade Policy Theory, Evidence and Applications, chapter 2, pages 23-35, World Scientific Publishing Co. Pte. Ltd..
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    16. Emanuel Ornelas, 2005. "Rent Destruction and the Political Viability of Free Trade Agreements," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(4), pages 1475-1506.
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    Cited by:

    1. Gene M. Grossman & Phillip McCalman & Robert W. Staiger, 2021. "The “New” Economics of Trade Agreements: From Trade Liberalization to Regulatory Convergence?," Econometrica, Econometric Society, vol. 89(1), pages 215-249, January.
    2. Schmidt, Julia & Steingress, Walter, 2022. "No double standards: Quantifying the impact of standard harmonization on trade," Journal of International Economics, Elsevier, vol. 137(C).
    3. Bård Harstad, 2022. "Trade, Trees, and Contingent Trade Agreements," CESifo Working Paper Series 9596, CESifo.
    4. Bård Harstad, 2020. "Trade and Trees: How Trade Agreements Can Motivate Conservation Instead of Depletion," CESifo Working Paper Series 8569, CESifo.
    5. Naoto JINJI & Yukiko SAWADA & Xingyuan ZHANG & Shoji HARUNA, 2021. "Gravity for Cross-border Licensing and the Impact of Deep Trade Agreements: Theory and Evidence," Discussion papers e-20-008, Graduate School of Economics , Kyoto University.
    6. Hideo Konishi & Minoru Nakada & Akihisa Shibata, 2024. "Free trade agreements with environmental provisions between asymmetric countries: transfer of clean technology and enforcement," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(1), pages 1-30, January.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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