Reciprocity in Free Trade Agreements

Freund, Caroline

World Bank, Washington, DC

关键词: FREE TRADE AGREEMENTS;    INCOME DATA;    RECIPROCITY;    TARIFFS;    TRADE NEGOTIATIONS;   

DOI  :  10.1596/1813-9450-3061
RP-ID  :  WPS3061

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The author uses detailed trade, tariff,and income data for countries involved in 91 tradeagreements negotiated since 1980 to test for reciprocity infree trade agreements. The results offer strong evidence ofreciprocity in North-North and South-South free tradeagreements, but there is little empirical support forreciprocity in North-South trade agreements. In particular,after controlling for other determinants of tradepreferences, the results suggest that a one percent increasein preferences offered leads to about a one-half of apercent increase in preferences received in North-North andSouth-South trade agreements. Freund also finds evidencethat large countries extract greater trade concessions fromsmall countries. This leads to a modified form ofreciprocity in North-South agreements. A large increase inaccess to a developing country market leads to only a smallincrease in access to a rich country market. The resultsimply that there are incentives for countries to maintainprotection in order to extract more concessions from tradepartners. But in general, such perverse incentives should beless of a concern in developing countries involved inNorth-South agreements because the value of a developingcountry tariff preference in terms of its effect on tradepreferences from a rich country is quite small. The gainsfrom unilateral liberalization are likely to far outweighpotential gains from using protection as a bargaining chipin trade negotiations. The evidence is consistent with arepeated game model of trade liberalization. The modelpresented shows that trade preferences granted areincreasing in trade preferences received. This implies thatcountries can extract greater concessions from tradeagreement members if they have higher external tradebarriers. However, if a country's trade barriers arevery large then the gains from reneging on the agreement inthe short run will be high, making the agreementunenforceable despite offering long-term gains. So, there isa reciprocity-credibility tradeoff. High tariffs may allowcountries to extract more concessions from potential tradeagreement partners, but they also make the country lesscredible in actually implementing agreed tariff concessions.If a country's external tariff is very high relative toother countries, then it will not be able to commit crediblyto any free trade agreement.