The Clash of Liberalizations: Preferential versus Multilateral Trade Liberalization in the European Union

Baybars Karacaovali and Nuno Limão

Fordham Economics Discussion Paper Series from Fordham University, Department of Economics

Abstract: Preferential trade agreements (PTAs) are characterized by liberalization with respect to only a few partners and thus they can potentially clash with, and retard multilateral trade liberalization (MTL). Yet there is almost no systematic evidence on whether the numerous existing PTAs actually affect MTL. We provide a model showing that PTAs hinder MTL unless they entail accession to a customs union with internal transfers. Using product-level tariffs negotiated by the European Union (EU) in the last two multilateral trade rounds we find that several of its PTAs have clashed with its MTL. However, this effect is absent for EU accessions. Moreover, we provide new evidence on the political economy determinants of trade policy in the EU.

Keywords: Preferential trade agreements; customs unions; multilateral trade negotiations; MNF tariff concessions; reciprocity (search for similar items in EconPapers)
JEL-codes: D78 F13 F14 F15 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-eec, nep-int and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Related works:
Working Paper: The clash of liberalizations: preferential versus multilateral trade liberalization in the European Union (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:frd:wpaper:dp2008-02

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