Bilateralism, multilateralism, and the quest for global free trade

Kamal Saggi () and Halis Yildiz

Chapter 7 in Economic Analysis of the Rules and Regulations of the World Trade Organization, 2018, pp 156-167 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We develop an equilibrium theory of trade agreements in which both the degree and the nature (bilateral or multilateral) of trade liberalization are endogenously determined. To determine whether and how bilateralism matters, we also analyze a scenario where countries pursue trade liberalization on only a multilateral basis. We find that when countries have asymmetric endowments or when governments value producer interests more than tariff revenue and consumer surplus, there exist circumstances where global free trade is a stable equilibrium only if countries are free to pursue bilateral trade agreements. By contrast, under symmetry, both bilateralism and multilateralism yield global free trade.

Keywords: Multilateral Trading System; Trade Agreements; Trade Liberalization; International Tariff Cooperation; WTO Disputes; Case Studies (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: Bilateralism, multilateralism, and the quest for global free trade (2010)
Working Paper: Bilateralism, multilateralism, and the quest for global free trade (2009)
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