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Book cover: Frontiers of Economics and Globalization

Frontiers of Economics and Globalization

ISSN: 1574-8715
Series editor(s): Professor Hamid Beladi, Professor E. Kwan Choi

Subject Area: Economics

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Chapter 20 International Trade Agreements


Document Information:
Title:Chapter 20 International Trade Agreements
Author(s):Wilfred J. Ethier
Volume:4 Editor(s): Sugata Marjit, Eden S.H. Yu ISBN: 978-0-4445-3190-2 eISBN: 978-1-84950-541-3
Citation:Wilfred J. Ethier (2008), Chapter 20 International Trade Agreements, in Sugata Marjit, Eden S.H. Yu (ed.) Contemporary and Emerging Issues in Trade Theory and Policy (Frontiers of Economics and Globalization, Volume 4), Emerald Group Publishing Limited, pp.381-395
DOI:10.1016/S1574-8715(08)04020-7 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Article type:Chapter Item
Abstract:Over the last 60 years, multilateral trade liberalization has reduced tariffs to historically low levels. The dominant theory of multilateral trade agreements, based solely on terms-of-trade externalities between national governments, is the conventional wisdom among international trade theorists. But it features two defects that render it inconsistent with reality. This chapter proposes a simple formulation of the political economy of protection that dispenses with terms-of-trade externalities, predicts the properties that empirical work has confirmed, and is free of the counterfactual implications of the dominant approach. The model is applied to trade agreements.

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