Fast-track authority: A hold-up interpretation

Levent Celik, Bilgehan Karabay and John McLaren

Journal of International Economics, 2020, vol. 127, issue C

Abstract: Under Fast-Track Authority (FT), the US Congress commits to an up-or-down vote without amendments for any trade agreement presented for ratification. We interpret FT in terms of a hold-up problem. If the US negotiates an agreement with a smaller economy, businesses there may make sunk investments for the US market. At the ratification stage, the partner economy will be locked in to the US in a way it was not previously and Congress can make changes adverse to the partner, so to convince the partner to negotiate, it must first commit not to amend the agreement. FT is then Pareto-improving.

Keywords: Fast-track authority; Trade policy; Hold-up; Rules of origin; Trade agreements (search for similar items in EconPapers)
JEL-codes: F13 F15 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Fast-Track Authority: A Hold-Up Interpretation (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:127:y:2020:i:c:s0022199620301070

DOI: 10.1016/j.jinteco.2020.103392

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