Mutual Recognition Agreements and Trade Diversion: Consequences for Developing Nations

Alberto AMURGO PACHECO ()

No 20-2006, HEI Working Papers from Economics Section, The Graduate Institute of International Studies

Abstract: This paper presents a baseline model that illustrates the implications of Mutual Recognition Agreements (MRAs) for excluded nations. The model shows that MRAs can harm third country exports because of a trade-diversion effect. We use highly disaggregated trade data from developed and developing nations to test whether or not MRAs have a negative effect on exports from excluded nations. In particular, we focus on the impact of a North-North MRA on the South. We find empirical evidence in support of the model; the MRA between the EU and the USA has harmed exports from Canada and the group of developing countries included in the study.

Keywords: International Economics; economic integration; Trade Policy; economic development; mutual recognition agreements; MRA; standards; trade diversion; zeros; cournot; quality; inspection; Canada; Mexico; USA; EU; European Union; FTA; TBT; regionalism (search for similar items in EconPapers)
JEL-codes: F13 F15 O12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-int
Date: 2006-10-26, Revised 2007-06
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Persistent link: http://EconPapers.repec.org/RePEc:gii:giihei:heiwp20-2006

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