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Unilateralism in a Multilateral World


  • Wilfred J. Ethier

    (University of Pennsylvania)


This paper addresses the interplay between unilateralism and multilateralism. I describe their stylised facts and present a simple, multi-country model with high initial tariffs and features that have always been of paramount concern to policy makers, and allow governments to negotiate multilateral agreements. I then find a role for a system with features remarkably similar to contemporary unilateralism. The relationships between multilateralism and unilateralism are subtle: Unilateralism has the properties it has because the world is multilateral (the "insurance" "triangle"); useful unilateralism requires a "multilateral" "component" resulting from a "compatibility problem" between those who negotiate multilaterally and those who establish unilateralism. Copyright 2002 Royal Economic Society

Suggested Citation

  • Wilfred J. Ethier, 2002. "Unilateralism in a Multilateral World," Economic Journal, Royal Economic Society, vol. 112(479), pages 266-292, April.
  • Handle: RePEc:ecj:econjl:v:112:y:2002:i:479:p:266-292

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    References listed on IDEAS

    1. Ethier, Wilfred J., 2001. "Theoretical problems in negotiating trade liberalization," European Journal of Political Economy, Elsevier, vol. 17(2), pages 209-232, June.
    2. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-1187, December.
    3. Bagwell,K. & Staiger,R.W., 1999. "Multilateral trade negotiations, bilateral opportunism and the rules of GATT," Working papers 6, Wisconsin Madison - Social Systems.
    4. Avinash Dixit, 2005. "Trade And Insurance With Moral Hazard," World Scientific Book Chapters,in: An Inframarginal Approach To Trade Theory, chapter 4, pages 53-74 World Scientific Publishing Co. Pte. Ltd..
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    8. Hillman, Arye L, 1990. "Protectionist Policies as the Regulation of International Industry," Public Choice, Springer, vol. 67(2), pages 101-110, November.
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    10. Michel Kostecki, 1987. "Export-restraint Arrangements and Trade Liberalization," The World Economy, Wiley Blackwell, vol. 10(4), pages 425-453, December.
    11. Wilfred J. Ethier, 1998. "Regionalism in a Multilateral World," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1214-1245, December.
    12. Ethier, Wilfred J & Horn, Henrik, 1996. "Results-Oriented Trade Policy," Review of International Economics, Wiley Blackwell, vol. 4(1), pages 17-39, February.
    13. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
    14. Staiger, Robert W., 1995. "International rules and institutions for trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 29, pages 1495-1551 Elsevier.
    15. Avinash Dixit, 1989. "Trade and Insurance with Adverse Selection," Review of Economic Studies, Oxford University Press, vol. 56(2), pages 235-247.
    16. Bruce A. Blonigen & Thomas J. Prusa, 2001. "Antidumping," NBER Working Papers 8398, National Bureau of Economic Research, Inc.
    17. Ethier, Wilfred J, 1998. "The New Regionalism," Economic Journal, Royal Economic Society, vol. 108(449), pages 1149-1161, July.
    18. K.C. Fung & Robert W. Staiger, 1994. "Trade Liberalization and Trade Adjustment Assistance," International Trade 9411002, EconWPA.
    19. Tharakan, P. K. M. & Waelbroeck, J., 1994. "Antidumping and countervailing duty decisions in the E.C. and in the U.S.: An experiment in comparative political economy," European Economic Review, Elsevier, vol. 38(1), pages 171-193, January.
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    Cited by:

    1. Richard E. Baldwin, 2011. "Multilateralising Regionalism: Spaghetti Bowls as Building Blocks on the Path to Global Free Trade," Chapters,in: International Handbook on the Economics of Integration, Volume I, chapter 2 Edward Elgar Publishing.
    2. Elie Appelbaum & Mark Melatos, 2014. "Option Values and the Choice of Trade Agreements," Working Papers 2014_1, York University, Department of Economics.
    3. Baldwin, Richard, 2011. "21st century regionalism: Filling the gap between 21st century trade and 20th century trade rules," WTO Staff Working Papers ERSD-2011-08, World Trade Organization (WTO), Economic Research and Statistics Division.
    4. Saggi, Kamal & Yildiz, Halis Murat, 2005. "The Case for MFN under Asymmetries of Cost and Market Structure," MPRA Paper 76331, University Library of Munich, Germany.
    5. Baldwin, Richard, 2010. "Unilateral tariff liberalisation," CEPR Discussion Papers 8162, C.E.P.R. Discussion Papers.
    6. repec:bla:reviec:v:25:y:2017:i:1:p:21-43 is not listed on IDEAS
    7. Elie Appelbaum & Mark Melatos, 2012. "How Does Uncertainty Affect the Choice of Trade AgreementsF," Working Papers 2012_1, York University, Department of Economics.
    8. Richard E. Baldwin, 2006. "Multilateralising Regionalism: Spaghetti Bowls as Building Blocs on the Path to Global Free Trade," The World Economy, Wiley Blackwell, vol. 29(11), pages 1451-1518, November.
    9. Meredith A. Crowley, 2003. "An introduction to the WTO and GATT," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 42-57.
    10. J. Peter Neary, 2004. "Europe on the Road to Doha: Towards a New Global Trade Round?," CESifo Economic Studies, CESifo, vol. 50(2), pages 319-332.
    11. Wilfred J. Ethier & Arye L. Hillman, 2017. "The Politics of International Trade," CESifo Working Paper Series 6456, CESifo Group Munich.
    12. James C. Hartigan & Hylke Vandenbussche, 2010. "Why does the WTO have an Antidumping Agreement?," LICOS Discussion Papers 25310, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    13. Thangavelu, Shandre M. & Narjoko, Dionisius, 2014. "Human capital, FTAs and foreign direct investment flows into ASEAN," Journal of Asian Economics, Elsevier, vol. 35(C), pages 65-76.
    14. Hillman, Arye L., 2003. "Trade Liberalization and Globalization: A Survey," CEPR Discussion Papers 3845, C.E.P.R. Discussion Papers.
    15. Meredith A. Crowley, 2006. "Why are safeguards needed in a trade agreement?," Working Paper Series WP-06-06, Federal Reserve Bank of Chicago.
    16. Hillman, Arye L., 2003. "Departure from Free Trade: A Survey," CEPR Discussion Papers 3707, C.E.P.R. Discussion Papers.
    17. Peter Neary & Ainars S¡lesers & Edward G. Krubasik & John M. Weekes, 2003. "Advancing Global Trade: Pro Liberalisation and Development," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 4(2), pages 52-67, October.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations


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