The clash of liberalizations: Preferential vs. multilateral trade liberalization in the European Union

Baybars Karacaovali and Nuno Limão

Chapter 14 in Policy Externalities and International Trade Agreements, 2018, pp 373-401 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Preferential trade agreements (PTAs) are characterized by liberalization with respect to only a few partners and thus they can potentially clash with, and retard multilateral trade liberalization (MTL). Yet there is almost no systematic evidence on whether the numerous existing PTAs actually affect MTL. We provide a model showing that PTAs hinder MTL unless they entail accession to a customs union with internal transfers. Using product-level tariffs negotiated by the European Union (EU) in the last two multilateral trade rounds we find that several of its PTAs have clashed with its MTL. However, this effect is absent for EU accessions. Moreover, we provide new evidence on the political economy determinants of trade policy in the EU.

Keywords: Trade; International Trade; WTO; World Trade Organization; Investment; Globalization; Externality; Policy; Cooperation (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2018
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Related works:
Journal Article: The clash of liberalizations: Preferential vs. multilateral trade liberalization in the European Union (2008)
Working Paper: THE CLASH OF LIBERALIZATIONS: PREFERENTIAL VS. MULTILATERAL TRADE LIBERALIZATION IN THE EUROPEAN UNION (2005)
Working Paper: The Clash of Liberalizations: Preferential vs. Multilateral Trade Liberalization in the European Union (2005)
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