Trade negotiations, domestic policies, and the Most Favored Nation clause

Gal Hochman

Canadian Journal of Economics/Revue canadienne d'économique, 2008, vol. 41, issue 3, 781-795

Abstract: Abstract. This paper illustrates how restricting trade instruments to non‐discrimination links trade agreements to non‐trade agreements and, under certain conditions, helps governments further lower tariffs and/or domestic standards (policies). These conditions are: (i) governments' objective functions are sufficiently concave with respect to domestic standards (policies); (ii) domestic standards are sufficiently valued; and (iii) policies are strategic complements. These can then be used as a rationale for restricting safeguard measures to non‐discrimination. Ce texte montre comment le fait de restreindre les instruments de politique commerciale à la seule poursuite de liens commerciaux libres de discrimination relie accords commerciaux et non‐commerciaux, et, à certaines conditions, aide les gouvernements à réduire encore davantage les tarifs douaniers et/ou les normes (politiques) nationales. Ces conditions sont que: (i) les fonctions objectives soient suffisamment concaves par rapport aux normes (politiques) nationales; (ii) les normes nationales soient suffisamment valorisées; et (iii) les politiques soient des compléments stratégiques. Ces arguments fournissent le rationale pour limiter les mesures de protection à la seule non‐discrimination.

Date: 2008
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https://doi.org/10.1111/j.1540-5982.2008.00485.x

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Journal Article: Trade negotiations, domestic policies, and the Most Favored Nation clause (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:canjec:v:41:y:2008:i:3:p:781-795

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