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Reciprocity and the hidden constitution of world trade

  • Carsten Herrmann-Pillath

    ()

In common descriptions of the world trading system, MFN and national treatment embody the principle of non-discrimination. Reciprocity is mostly regarded as a remnant of mercantilist trade policy. This paper argues that reciprocity is the more fundamental constitutional rule, because it reflects the unanimity principle enabling countries to identify Pareto-improving changes of trade policy. I reconstruct the implicit constitution of world trade by applying some methodology of positive constitutional economics. A major result is that in the Uruguay round a fundamental constitutional change took place from general reciprocity to “status quo reciprocity”, which entails the possibility of Pareto-deteriorating institutional changes. Copyright Springer Science+Business Media, LLC 2006

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File URL: http://hdl.handle.net/10.1007/s10602-006-9000-2
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Article provided by Springer in its journal Constitutional Political Economy.

Volume (Year): 17 (2006)
Issue (Month): 3 (September)
Pages: 133-163

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Handle: RePEc:kap:copoec:v:17:y:2006:i:3:p:133-163
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