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National Treatment At The Wto: The Roles Of Product And Country Heterogeneity

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  • Kamal Saggi
  • Nese Sara

Abstract

This paper analyzes the World Trade Organization's (WTO's) national treatment (NT) clause in a two-country model where quality of goods and/or market size are heterogenous across countries. When market size is symmetric across countries, a reciprocal NT agreement (i) benefits the high-quality country, (ii) hurts the low-quality country, and (iii) delivers higher aggregate world welfare. However, such an agreement can arise in equilibrium if the high-quality country's market is relatively bigger and the quality gap between goods is small (i.e., goods are sufficiently "alike"). The qualitative nature of these results does not change when quality is endogenously determined. Copyright © (2008) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Kamal Saggi & Nese Sara, 2008. "National Treatment At The Wto: The Roles Of Product And Country Heterogeneity," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1365-1394, November.
  • Handle: RePEc:ier:iecrev:v:49:y:2008:i:4:p:1365-1394
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    Citations

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    Cited by:

    1. Horn, Henrik, 2009. "The Burden of Proof in National Treatment Disputes and the Environment," Working Paper Series 791, Research Institute of Industrial Economics.
    2. Horn, Henrik, 2011. "The burden of proof in trade disputes and the environment," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 15-29, July.
    3. repec:eee:jjieco:v:46:y:2017:i:c:p:43-52 is not listed on IDEAS
    4. Emanuele Bacchiega & Antonio Minniti & Arsen Palestini, 2016. "Quality, distance and trade: A strategic approach," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 165-191, March.
    5. Geng, Difei & Saggi, Kamal, 2015. "Is there a case for non-discrimination in the international protection of intellectual property?," Journal of International Economics, Elsevier, vol. 97(1), pages 14-28.
    6. Bacchiega, Emanuele & Randon, Emanuela & Zirulia, Lorenzo, 2012. "Strategic accessibility competition," Research in Economics, Elsevier, vol. 66(2), pages 195-212.
    7. Spearot, Alan C., 2013. "Variable demand elasticities and tariff liberalization," Journal of International Economics, Elsevier, vol. 89(1), pages 26-41.
    8. Naoshi Doi & Hiroshi Ohashi, 2012. "Empirical Analysis of the National Treatment Obligation Under the WTO: The Case of Japanese Shochu ," CIRJE F-Series CIRJE-F-834, CIRJE, Faculty of Economics, University of Tokyo.
    9. repec:eee:worbus:v:53:y:2018:i:2:p:164-176 is not listed on IDEAS
    10. Maggi, Giovanni, 2014. "International Trade Agreements," Handbook of International Economics, Elsevier.
    11. Paul Missios & Ida Ferrara & Halis Murat Yildiz, 2015. "Consumption Externalities, Product Quality, and the Role of National Treatment," Working Papers 048, Ryerson University, Department of Economics.
    12. Difei Geng & Kamal Saggi, 2013. "The case for non-discrimination in the international protection of intellectual property," Vanderbilt University Department of Economics Working Papers 13-00017, Vanderbilt University Department of Economics.
    13. Ederington,Josh & Ruta,Michele, 2016. "Non-tariff measures and the world trading system," Policy Research Working Paper Series 7661, The World Bank.

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