Self-Enforcing Trade

Self-Enforcing Trade
Title Self-Enforcing Trade PDF eBook
Author Chad P. Bown
Publisher Rowman & Littlefield
Total Pages 301
Release 2010-02-01
Genre Political Science
ISBN 0815704186

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The World Trade Organization—backbone of today's international commercial relations—requires member countries to self-enforce exporters' access to foreign markets. Its dispute settlement system is the crown jewel of the international trading system, but its benefits still fall disproportionately to wealthy nations. Could the system be doing more on behalf of developing countries? In Self-Enforcing Trade, Chad P. Bown explains why the answer is an emphatic "yes." Bown argues that as poor countries look to the benefits promised by globalization as part of their overall development strategy, they increasingly require access to the WTO dispute settlement process to protect their trading interests. Unfortunately, the practical realities of WTO dispute settlement as it currently stands create a number of hurdles that prevent developing countries from enjoying the trading system's full benefits. This book confronts these challenges. Self-Enforcing Trade examines the WTO's "extended litigation process," highlighting the tangle of international economics, law, and politics that participants must master. He identifies the costs that prevent developing countries from disentangling the self-enforcement process and fully using the WTO system as part of their growth strategies. Bown assesses recent efforts to help developing countries overcome those costs, including the role of the Advisory Centre on WTO Law and development focused NGOs. Bown's proposed Institute for Assessing WTO Commitments tackles the largest remaining obstacle currently limiting developing country engagement in the WTO's selfenforcement process—a problematic lack of information, monitoring, and surveillance.

Self-Enforcing Trade Agreements

Self-Enforcing Trade Agreements
Title Self-Enforcing Trade Agreements PDF eBook
Author Chad P. Bown
Publisher
Total Pages
Release 2012
Genre
ISBN

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This paper estimates a model of a government making trade policy adjustments under a self-enforcing trade agreement in the presence of economic shocks. The empirical model is motivated by the formal theories of cooperative trade agreements. The authors find evidence that United States' use of its antidumping policy during 1997-2006 is consistent with increases in time-varying "cooperative" tariffs, where the likelihood of antidumping is increasing in the size of unexpected import surges, decreasing in the volatility of imports, and decreasing in the elasticities of import demand and export supply. The analysis finds additional support for the theory that some US antidumping use is consistent with cooperative behavior through a second empirical examination of how trading partners responded to these new US tariffs. Even after controlling for factors such as the expected cost and benefit to filing a WTO dispute or engaging in antidumping retaliation, the analysis find that trading partners are less likely to challenge such "cooperative" US antidumping tariffs that were imposed under terms-of-trade pressure suggested by the theory.

Self-enforcing trade agreements and private information

Self-enforcing trade agreements and private information
Title Self-enforcing trade agreements and private information PDF eBook
Author Kyle Bagwell
Publisher
Total Pages 49
Release 2009
Genre Commercial treaties
ISBN

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This paper considers self-enforcing trade agreements among privately informed governments. A trade agreement that uses weak bindings (i.e., maximal tariff levels) is shown to offer advantages relative to a trade agreement that uses strong bindings (i.e., precise tariff levels). Consistent with practice, the theory also predicts that governments sometimes apply tariffs that are strictly below their bound rates. When private information is persistent through time, an enforcement "ratchet effect" is identified: a government reveals that it is "weak," and thus that it is unlikely to retaliate in an effective manner, when it applies a low tariff. This effect suggests that a government with a low type may "pool" at an above-optimal tariff, in order to conceal weakness. It also suggests a new information-based theory of gradualism in trade agreements.

Self-enforcing Trade Agreements

Self-enforcing Trade Agreements
Title Self-enforcing Trade Agreements PDF eBook
Author Chad P. Brown
Publisher
Total Pages 37
Release 2009
Genre Antidumping duties
ISBN

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"This paper empirically examines how governments make trade policy adjustments under a self-enforcing trade agreement in the presence of economic shocks. Using data on US antidumping (AD) policy formation between 1997-2006, we find that US antidumping policy is often consistent with the time-varying "cooperative" tariff increases modeled in the self-enforcing trade agreement of Bagwell and Staiger (1990). Estimates of an empirical model of US antidumping indicate that the likelihood of a US antidumping duty is increasing in the size of the unexpected import surge, decreasing in the volatility of imports and decreasing in the elasticities of import demand and export supply. This suggests that time-varying increases in US tariff rates under antidumping policy could be interpreted as "cooperative" tariff increases that support a self-enforcing trade agreement facing an unexpected import surge."

Ranking Policy Instruments in Self-enforcing Trade Agreements

Ranking Policy Instruments in Self-enforcing Trade Agreements
Title Ranking Policy Instruments in Self-enforcing Trade Agreements PDF eBook
Author Constantinos Syropoulos
Publisher
Total Pages
Release 1993
Genre
ISBN

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Self-Enforcing Trade Agreements, Dispute Settlement and Separation of Powers

Self-Enforcing Trade Agreements, Dispute Settlement and Separation of Powers
Title Self-Enforcing Trade Agreements, Dispute Settlement and Separation of Powers PDF eBook
Author Kristy Buzard
Publisher
Total Pages 44
Release 2015
Genre
ISBN

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In an environment where international trade agreements must be enforced via promises of future cooperation, the presence of an import-competing lobby has important implications for optimal punishments, and therefore dispute resolution procedures. When lobbies work to disrupt trade agreements, the optimal punishment must balance two, conflicting objectives. Longer punishments help to enforce cooperation by increasing the government's costs of defecting, but because the lobby prefers the punishment outcome, this also incentivizes lobbying effort and with it political pressure to break the agreement. Thus the model generates new predictions for the design of mechanisms for resolving trade disputes: within the class of Nash-reversion punishments, there is an optimal length for dispute resolutions procedures, and it depends directly on the political influence of the lobbies. Trade agreement tariffs are shown to be increasing in the political influence of the lobbies, as well as their patience levels.

Domestic Policies in Self-Enforcing Trade Agreements

Domestic Policies in Self-Enforcing Trade Agreements
Title Domestic Policies in Self-Enforcing Trade Agreements PDF eBook
Author Philip U. Sauré
Publisher
Total Pages 0
Release 2012
Genre
ISBN

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If all cross-country externalities travel through the terms-of-trade, efficient trade agreements target the terms-of-trade but ignore domestic policies. This argument has been advanced by prominent studies on trade agreements. The present paper shows that its logic fails if production possibilities are intertemporally linked -- for example, under dynamic factor accumulation. In this case, past policies shape current production possibilities and thus affect defection temptations. Therefore, self-enforcing trade agreements that leave the choice of domestic policies to individual countries risk that countries abandon the zone of voluntarily cooperation while optimizing their policies. Consequently, trade agreements that target only the terms-of-trade suffer inefficiencies that are absent in trade agreements that target policies directly. The losses are strictly positive except for knife-edge cases, which existing studies have focussed on.