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Modelling Reciprocal Trade Liberalization: The Political-economy and National-welfare Perspectives

Author

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  • Arye L. Hillman
  • Ngo Van Long
  • Peter Moser

Abstract

We present results of recent research that provides a positive theory of reciprocal trade liberalization policies by governments with political support concerns. The exchange of market access permits governments to benefit each others' exporters, thereby reciprocally facilitating political-support enhancing income transfers that could not have been made unilaterally. In contrast to the optimum tariff-bargaining literature, our explanation of reciprocal liberalization is consistent with the political-economy explanation of protection, and with the objectives of international trade negotiators who seek to improve foreign market access for their exporters in exchange for "concessions" in opening the access to domestic markets.

Suggested Citation

  • Arye L. Hillman & Ngo Van Long & Peter Moser, 1995. "Modelling Reciprocal Trade Liberalization: The Political-economy and National-welfare Perspectives," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 131(III), pages 503-515, September.
    • Handle: RePEc:ses:arsjes:1995-iii-14
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    Cited by:

    1. Olarreaga, Marcelo & Soloaga, Isidro & Winters, L. Alan, 1999. "What's Behind Mercosur's CET?," CEPR Discussion Papers 2310, C.E.P.R. Discussion Papers.
    2. Gründler, Klaus & Hillman, Arye L., 2021. "Ambiguous protection," European Journal of Political Economy, Elsevier, vol. 68(C).
    3. Feeney, JoAnne & Hillman, Arye L., 2004. "Trade liberalization through asset markets," Journal of International Economics, Elsevier, vol. 64(1), pages 151-167, October.
    4. Evenett, Simon J. & Hoekman, Bernard M., 2005. "Government procurement: market access, transparency, and multilateral trade rules," European Journal of Political Economy, Elsevier, vol. 21(1), pages 163-183, March.
    5. repec:elg:eechap:15325_12 is not listed on IDEAS
    6. Cadot, Olivier & de Melo, Jaime & Olarreaga, Marcelo, 2001. "Can bilateralism ease the pains of multilateral trade liberalization?," European Economic Review, Elsevier, vol. 45(1), pages 27-44, January.
    7. Wilfred J. Ethier, 2002. "Trade Policies Based on Political Externalities: An Exploration, Third Version," PIER Working Paper Archive 04-006, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 04 Feb 2004.
    8. Wilfred J. Ethier, 2006. "Selling Protection for Sale," PIER Working Paper Archive 06-014, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Jun 2006.
    9. Grossman, Gene, 2016. "The Purpose of Trade Agreements," CEPR Discussion Papers 11151, C.E.P.R. Discussion Papers.
    10. Breton, Albert & Salmon, Pierre, 2001. "External effects of domestic regulations: comparing internal and international barriers to trade," International Review of Law and Economics, Elsevier, vol. 21(2), pages 135-155, June.
    11. Hillman, Arye L., 2003. "Trade Liberalization and Globalization: A Survey," CEPR Discussion Papers 3845, C.E.P.R. Discussion Papers.
    12. Jagdambe, Subhash & Kannan, Elumalai, 2020. "Effects of ASEAN-India Free Trade Agreement on agricultural trade: The gravity model approach," World Development Perspectives, Elsevier, vol. 19(C).
    13. Richard Baldwin, 2014. "WTO 2.0: governance of global supply-chain trade," Chapters, in: Richard Baldwin & Masahiro Kawai & Ganeshan Wignaraja (ed.), A World Trade Organization for the 21st Century, chapter 2, pages 12-47, Edward Elgar Publishing.
    14. Shuhao Zhao & Tianao Chang & Yumo Ni & Ping Zhou, 2023. "An Empirical Study of Trade in Goods between China and Brazil: Analysis of Competitiveness and Complementarity," Economies, MDPI, vol. 11(9), pages 1-16, September.
    15. Wilfred J. Ethier, 2011. "The Political-Support View of Protection," PIER Working Paper Archive 11-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    16. Madani, Dorsati & Olarreaga, Marcelo, 2002. "Politically optimal tariffs : an application to Egypt," Policy Research Working Paper Series 2882, The World Bank.
    17. Ethier, Wilfred J., 2007. "The theory of trade policy and trade agreements: A critique," European Journal of Political Economy, Elsevier, vol. 23(3), pages 605-623, September.
    18. Robert Pahre, 1998. "Reactions and Reciprocity," Journal of Conflict Resolution, Peace Science Society (International), vol. 42(4), pages 467-492, August.
    19. Olarreaga, Marcelo & Soloaga, Isidro & Winters, Alan, 1999. "What's behind MERCOSUR's common external tariff?," Policy Research Working Paper Series 2231, The World Bank.
    20. Wilfred J. Ethier & Arye L. Hillman, 2017. "The Politics of International Trade," CESifo Working Paper Series 6456, CESifo.
    21. BRETON, Albert & SALMON, Pierre, 1999. "A comparison of internal and international barriers to trade," LATEC - Document de travail - Economie (1991-2003) 1999-12, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
    22. Wilfred J. Ethier, 2013. "The Trade Agreement Embarrassment, Second Version," PIER Working Paper Archive 13-049, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 02 Sep 2013.
    23. Wilfred J. Ethier, 2002. "Trade Agreements Based on Political Externalities, Second Version," PIER Working Paper Archive 03-035, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 30 Nov 2003.

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