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Trade Creation, Political Sensitivity and Product Exclusions: the Political Economy of Agriculture Protection in China’s FTAs

Jianxing Lyu, Soren Prehn, Yanjie Zhang, Thomas Glauben and Yinchu Zeng

No 284867, 2017 ASAE 9th International Conference, January 11-13, Bangkok, Thailand from Asian Society of Agricultural Economists (ASAE)

Abstract: One of the most significant features in Free Trade Agreement (FTA) is that certain products are excluded from tariff concession. Why do some products get more protection in FTAs?In this paper, using the highly disaggregated product-level data in agricultural sector of China’s FTAs, we examined and extended the hypothesis developed by Grossman and Helpman (1995), illustrating the products which are more likely to be excluded in FTAs. Our results suggest that, with the involvement of political costs to incumbent government, products which experience trade creation and have more political sensitivity are more likely to be excluded in FTAs. Moreover, we revealed that the Chinese government tend to achieve different goals through negotiation power, seeking more economic benefits from big-trading partners while giving more concession to small-trading partners.

Keywords: Political; Economy (search for similar items in EconPapers)
Date: 2017-01
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