How bilateral trade deals get in the way of multilateral agreements: Why WTO is marginalized

Jayson Beckman, Maros Ivanic and Saleem Shaik

Journal of Policy Modeling, 2023, vol. 45, issue 5, 877-894

Abstract: We use a ‘Nash in Nash’ framework within a computable general equilibrium model to determine the welfare maximizing set of bilateral trade agreements for countries in the Trans-Pacific Partnership. Comparing these agreements to an agreement involving all countries/sectors, we find that welfare is always larger in the multilateral agreement. This is because several sectors are often excluded from the bilateral agreements, and not all countries would have a bilateral agreement with others. The sectors that are often excluded from the agreements are agriculture, as these sectors are often deemed ‘sensitive’ in negotiations and are protected by high initial tariffs.

Keywords: Trade agreements; Nash in Nash; Equilibrium; Welfare (search for similar items in EconPapers)
JEL-codes: F1 Q17 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:45:y:2023:i:5:p:877-894

DOI: 10.1016/j.jpolmod.2023.05.006

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