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Reciprocity and the Political Economy of Harmonization and Mutual Recognition of Regulatory Measures

Author

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  • Verdier, Thierry
  • Suwa-Eisenmann, Akiko

Abstract

This Paper discusses the issue of regulatory protectionism and its implication for reciprocity and international bargaining on regulation. In a simple two way trade model a la Brander and Spencer, we take into account the three following features of regulatory measures: a) a regulation raises the cost not only of foreign producers but also of domestic producers; b) a regulation also creates a fixed cost which is entirely supported by foreign exporters; c) a regulation may provide a welfare gain valued per se by individuals or to correct some market failure. In this context, we investigate the political economy forces for unilateral regulatory protectionism and the effectiveness of various intra-sectorial bargaining schemes (negotiated reciprocal regulation setting, harmonization or mutual recognition agreements) to ensure reciprocal market access.

Suggested Citation

  • Verdier, Thierry & Suwa-Eisenmann, Akiko, 2002. "Reciprocity and the Political Economy of Harmonization and Mutual Recognition of Regulatory Measures," CEPR Discussion Papers 3147, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3147
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    Citations

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    Cited by:

    1. A. Mantovani & M. Vancauteren, 2003. "The Harmonization of Technical Barriers to Trade, Innovation and Export Behavior: Theory with an application to EU Environmental Data," Working Papers 480, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Johan F.M. Swinnen & Thijs Vandemoortele, 2008. "The Political Economy of Nutrition and Health Standards in Food Markets," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 460-468.
    3. Johan F.M. Swinnen & Thijs Vandemoortele, 2009. "Trade, Development, and the Political Economy of Public Standards," LICOS Discussion Papers 23609, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    4. MANTOVANI Andrea & VANCAUTEREN Mark, 2010. "The Harmonization of Technical Barriers to Trade, Innovation and Export Behavior: Theory with an Application to EU Environmental Regulations," EcoMod2003 330700094, EcoMod.
    5. Costinot, Arnaud, 2008. "A comparative institutional analysis of agreements on product standards," Journal of International Economics, Elsevier, vol. 75(1), pages 197-213, May.
    6. Toulemonde, Eric, 2013. "A welfare analysis of the principle of mutual recognition," European Economic Review, Elsevier, vol. 60(C), pages 1-16.
    7. Alberto AMURGO PACHECO, 2006. "Mutual Recognition Agreements and Trade Diversion: Consequences for Developing Nations," IHEID Working Papers 20-2006, Economics Section, The Graduate Institute of International Studies, revised Jun 2007.
    8. Katia Berti & Rod Falvey, 2011. "Does Trade Weaken product Quality Standards?," Discussion Papers 11/24, University of Nottingham, GEP.

    More about this item

    Keywords

    Mutual recognition; Standards; Trade policy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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