The Farsighted Stability of Global Trade Policy Arrangements
Social Science Research Network(2022)
摘要
In this paper, we study and compare the stability of trade policy
arrangements in two different regulatory scenarios, one with and one without
Preferential Trade Agreements (PTAs), i.e. current vs. modified WTO rules.
Unlike the existing literature, our paper considers an extensive choice set of
trade constellations, containing both available PTAs, Customs Unions (CUs)
and Free Trade Agreements (FTAs), as well as Multilateral Trade Agreements
(MTAs), while assuming unlimited farsightedness of the negotiating parties.
With symmetric countries and under both the current and the modified WTO
rules, the Global Free Trade (GFT) regime emerges as the unique stable outcome.
In the case of asymmetry, the results are driven by the relative size of
the countries. If the world is in the vicinity of symmetry and two out of three
countries are close to identical while relatively smaller than the other one, the
area where the GFT regime is stable increases when prohibiting PTAs. However,
when two similar countries are relatively larger, the availability of PTAs
is conducive to the stability of the GFT regime. Finally, if the world is further
away from symmetry, full trade liberalization is not attainable at all and an
area where the Most-Favoured-Nation (MFN) regime is stable appears in the
scenario without PTAs. Thus, the direction of the effect of PTAs on trade
liberalization depends on the degree of asymmetry among countries.
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