Reciprocity and the hidden constitution of world trade

Carsten Herrmann-Pillath

Constitutional Political Economy, 2006, vol. 17, issue 3, 133-163

Abstract: In common descriptions of the world trading system, MFN and national treatment embody the principle of non-discrimination. Reciprocity is mostly regarded as a remnant of mercantilist trade policy. This paper argues that reciprocity is the more fundamental constitutional rule, because it reflects the unanimity principle enabling countries to identify Pareto-improving changes of trade policy. I reconstruct the implicit constitution of world trade by applying some methodology of positive constitutional economics. A major result is that in the Uruguay round a fundamental constitutional change took place from general reciprocity to “status quo reciprocity”, which entails the possibility of Pareto-deteriorating institutional changes. Copyright Springer Science+Business Media, LLC 2006

Keywords: Positive constitutional economics; WTO/GATT; Reciprocity; Regionalism; MFN; F02; F13 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:kap:copoec:v:17:y:2006:i:3:p:133-163

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DOI: 10.1007/s10602-006-9000-2

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