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A 'New Trade' Theory of GATT/WTO Negotiations

  • Ralph Ossa
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    I develop a novel theory of GATT/WTO negotiations. This theory provides new answers to two prominent questions in the trade policy literature: first, what is the purpose of trade negotiations? And second, what is the role played by the fundamental GATT/WTO principles of reciprocity and nondiscrimination? Relative to the standard terms-of-trade theory of GATT/WTO negotiations, my theory makes two main contributions: first, it builds on a 'new trade' model rather than the neoclassical trade model and therefore sheds new light on GATT/WTO negotiations between similar countries. Second, it relies on a production relocation externality rather than the terms-of-trade externality and therefore demonstrates that the terms-of-trade externality is not the only trade policy externality which can be internalized in GATT/WTO negotiations.

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    Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0877.

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    Date of creation: Jun 2008
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    Handle: RePEc:cep:cepdps:dp0877
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