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What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization

What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization Abstract According to the terms-of-trade theory, governments use trade agreements to escape from a terms-of-trade-driven prisoner's dilemma. We use the terms-of-trade theory to develop a relationship that predicts negotiated tariff levels on the basis of pre-negotiation data: tariffs, import volumes and prices, and trade elasticities. We then confront this predicted relationship with data on the outcomes of tariff negotiations associated with the accession of new members to the World Trade Organization. We find strong and robust support for the central predictions of the terms-of-trade theory in the observed pattern of negotiated tariff cuts. (JEL F11, F13 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization

Bagwell, Kyle; Staiger, Robert W
American Economic Review , Volume 101 (4) – Jun 1, 2011
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Publisher
American Economic Association
Copyright
Copyright © 2011 by the American Economic Association
Subject
Articles
ISSN
0002-8282
DOI
10.1257/aer.101.4.1238
Publisher site
See Article on Publisher Site

Abstract

Abstract According to the terms-of-trade theory, governments use trade agreements to escape from a terms-of-trade-driven prisoner's dilemma. We use the terms-of-trade theory to develop a relationship that predicts negotiated tariff levels on the basis of pre-negotiation data: tariffs, import volumes and prices, and trade elasticities. We then confront this predicted relationship with data on the outcomes of tariff negotiations associated with the accession of new members to the World Trade Organization. We find strong and robust support for the central predictions of the terms-of-trade theory in the observed pattern of negotiated tariff cuts. (JEL F11, F13 )

Journal

American Economic Review – American Economic Association

Published: Jun 1, 2011

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