Enforcement, private political pressure and the GATT/WTO escape clause
By: Kyle Bagwell, Robert W. Staiger.
Contributors: Staiger, Robert W.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10987; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10987.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Commercial treaties.; International trade -- Political aspects.
Description: "We consider the design and implementation of international trade agreements when: (i) negotiations are undertaken and commitments made in the presence of uncertainty about future political pressures; (ii) governments possess private information about political pressures at the time that the agreement is actually implemented; and (iii) negotiated commitments can be implemented only if they are self-enforcing.  We thus consider the design of self-enforcing trade agreements among governments that acquire private information over time.  In this context, we provide equilibrium interpretations of GATT/WTO negotiations regarding upper bounds on applied tariffs and GATT/WTO escape clauses.  We find that governments achieve greater welfare when they negotiate the optimal upper bound on tariffs rather than precise tariff levels; furthermore, when governments negotiate the optimal upper bound on tariffs, the observed applied tariffs often fall strictly below the bound.  Our analysis also provides a novel interpretation of a feature of the WTO Safeguard Agreement, under which escape clause actions cannot be re-imposed in the same industry for a time period equal to the duration of the most recent escape clause action.  We find that a dynamic usage constraint of this kind can raise the expected welfare of negotiating governments"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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