The clash of liberalizations
Subtitle: Preferential versus multilateral trade liberalization in the European Union
By: Baybars Karacaovali and Nuno Limao.
Contributors: Limão, Nuno.; World Bank.
Series: Policy research working paper ;; 3493; Policy research working papers (Online) ;; 3493.
Publisher: World Bank
Published: 2005
Place of publication: [Washington, D.C
Language: eng
Format: Electronic resource
Subjects: Tariff preferences -- European Union countries.; Free trade -- European Union countries.
Description: "There has been an explosion in the number of preferential trade agreements in the past decade.  Preferential trade agreements are characterized by liberalization with respect to only a few partners and thus they can potentially clash with and retard multilateral trade liberalization.  Despite this important concern with preferential trade agreements, there is almost no systematic evidence on whether they actually affect multilateral trade liberalization.  Karacaovali and Limô model the effect of preferential trade agreements on multilateral trade liberalization and show that preferential trade agreements slow down multilateral trade liberalization unless they have a common external tariff and allow for internal transfers.  Next, they use detailed data on product-level tariffs negotiated by the European Union in the past two multilateral trade rounds to structurally estimate their model.  The authors confirm the main prediction--the European Union's preferential trade agreements have clashed with its multilateral trade liberalization---and find that the effect is quantitatively significant.  Moreover, they also confirm several auxiliary predictions of the model and provide new evidence on the political economy determinants of multilateral liberalization in the European Union.  This paper--a product of the Trade Team, Development Research Group--is part of a larger effort in the group to understand the interaction between preferential and multilateral liberalization"--World Bank web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 1/24/2005.
Also available in print.
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Mode of access: World Wide Web.