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Should credit be given for autonomous liberalization in multilateral trade negotiations?

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  • Mattoo, Aaditya
  • Olarreaga, Marcelo

Abstract

As each new round of multilateral trade negotiations approaches, there is a demand for a negotiating rule that would give credit for autonomous (unilateral) liberalization. The authors show that the feasibility, and desirability of such a rule depend on when it is instituted. A credit rule established at the beginning of a round of negotiations has a primarily distributional effect, favoringthose who have already undertaken liberalization. Implementing such a rule would depend on the generosity of those who have not liberalized. The authors propose instead establishing a credit rule at the end of a round of negotiations, which creates an ex-ante assurance that any unilateral liberalization will receive credit in the next round. Such a rule would help induce, or enhance liberalization in some countries between negotiating rounds, by reducing the gains from retaining protection as negotiating currency. More strikingly, it could also lead to deeper levels of multilateral liberalization, and induce other countries to go further than they would in the absence of a rule. Most important, such an ex-ante rule would not rely on altruism to be generally acceptable.

Suggested Citation

  • Mattoo, Aaditya & Olarreaga, Marcelo, 2000. "Should credit be given for autonomous liberalization in multilateral trade negotiations?," Policy Research Working Paper Series 2374, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2374
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    References listed on IDEAS

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    1. Grossman, Gene M & Helpman, Elhanan, 1995. "Trade Wars and Trade Talks," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 675-708, August.
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    3. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    4. Ingco, Merlinda D., 1995. "Agricultural trade liberalization in the Uruguay Round : one step forward, one step back?," Policy Research Working Paper Series 1500, The World Bank.
    5. Gros, Daniel, 1987. "A note on the optimal tariff, retaliation and the welfare loss from tariff wars in a framework with intra-industry trade," Journal of International Economics, Elsevier, vol. 23(3-4), pages 357-367, November.
    6. Giovanni Maggi, 1999. "The Role of Multilateral Institutions in International Trade Cooperation," American Economic Review, American Economic Association, vol. 89(1), pages 190-214, March.
    7. Olarreaga, Marcelo & Soloaga, Isidro & Winters, Alan, 1999. "What's behind MERCOSUR's common external tariff?," Policy Research Working Paper Series 2231, The World Bank.
    8. Winters, L. Alan & Chang, Won, 2000. "Regional integration and import prices: an empirical investigation," Journal of International Economics, Elsevier, vol. 51(2), pages 363-377, August.
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    Cited by:

    1. Kyle Bagwell & Robert W. Staiger, 2013. "Can the Doha Round Be a Development Round? Setting a Place at the Table," NBER Chapters,in: Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, pages 91-124 National Bureau of Economic Research, Inc.
    2. Hoekman, Bernard, 2002. "Developing Countries and the Political Economy of the Trading System," WIDER Working Paper Series 126, World Institute for Development Economic Research (UNU-WIDER).
    3. Mattoo, Aaditya, 2001. "Shaping future GATS rules for trade in services," Policy Research Working Paper Series 2596, The World Bank.
    4. Mattoo, Aaditya & Olarreaga, Marcelo, 2000. "Reciprocity Across Modes of Supply in the WTO: A Negotiating Formula," CEPR Discussion Papers 2481, C.E.P.R. Discussion Papers.
    5. Mattoo, Aaditya & Olarreaga, Marcelo, 2000. "Reciprocity across modes of supply in the World Trade Organization : a negotiating formula," Policy Research Working Paper Series 2373, The World Bank.
    6. Zdzisław W. Puślecki, 2016. "Bilateral trade agreements and the rise of global supply chains," Journal of Economic and Financial Studies (JEFS), LAR Center Press, vol. 4(5), pages 17-23, October.

    More about this item

    Keywords

    Environmental Economics&Policies; Economic Theory&Research; Insurance&Risk Mitigation; Payment Systems&Infrastructure; Financial Crisis Management&Restructuring; Agricultural Research; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Economic Theory&Research; Environmental Economics&Policies; Insurance&Risk Mitigation;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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