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How bilateral trade deals get in the way of multilateral agreements: Why WTO is marginalized

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  • Beckman, Jayson
  • Ivanic, Maros
  • Shaik, Saleem

Abstract

We use a ‘Nash in Nash’ framework within a computable general equilibrium model to determine the welfare maximizing set of bilateral trade agreements for countries in the Trans-Pacific Partnership. Comparing these agreements to an agreement involving all countries/sectors, we find that welfare is always larger in the multilateral agreement. This is because several sectors are often excluded from the bilateral agreements, and not all countries would have a bilateral agreement with others. The sectors that are often excluded from the agreements are agriculture, as these sectors are often deemed ‘sensitive’ in negotiations and are protected by high initial tariffs.

Suggested Citation

  • Beckman, Jayson & Ivanic, Maros & Shaik, Saleem, 2023. "How bilateral trade deals get in the way of multilateral agreements: Why WTO is marginalized," Journal of Policy Modeling, Elsevier, vol. 45(5), pages 877-894.
    • Handle: RePEc:eee:jpolmo:v:45:y:2023:i:5:p:877-894
    DOI: 10.1016/j.jpolmod.2023.05.006
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    More about this item

    Keywords

    Trade agreements; Nash in Nash; Equilibrium; Welfare;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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