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Are global trade negotiations behind a fragmented world of “gated globalization”?

James Lake () and Santanu Roy ()

Journal of International Economics, 2017, vol. 108, issue C, 117-136

Abstract: We show that global trade negotiations can prevent global free trade. In a simple model where global tariff negotiations precede sequential Free Trade Agreements (FTAs), we show FTA formation can expand all the way to global free trade in the absence of global tariff negotiations but global free trade never emerges when global tariff negotiations precede FTA formation. This result arises precisely because global tariff negotiations successfully elicit concessions from negotiating countries. Moreover, global tariff negotiations can produce a fragmented world of “gated globalization” where some countries form FTAs that eliminate tariff barriers among themselves while outsiders continue facing higher tariffs.

Keywords: Free Trade Agreement; Global free trade; Multilateralism; Tariff complementarity; Binding overhang (search for similar items in EconPapers)
JEL-codes: C73 F12 F13 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Are global trade negotiations behind a fragmented world of "gated globalization"? (2015) Downloads
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