The Clash of Liberalizations : Preferential versus Multilateral Trade Liberalization in the European Union

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 imp...

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Main Authors:	Karacaovali, Baybars, Limão, Nuno
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2012
Subjects:	BALANCE OF PAYMENTS BENCHMARK BILATERAL TRADE COMMON TARIFF CONDITIONALITY CONSTANT RETURNS TO SCALE CONSUMER SURPLUS CONSUMER] PRICE CONSUMERS CUSTOMS CUSTOMS UNION CUSTOMS UNIONS DEMAND CURVES DETERMINATION PROCESS DEVELOPED COUNTRIES DISCOUNTED VALUE DOMESTIC PRICES ECONOMIC THEORY ECONOMISTS ELASTICITY EMPIRICAL EVIDENCE EMPLOYMENT ENVIRONMENTAL ISSUES ENVIRONMENTAL PROBLEMS EQUILIBRIUM EQUILIBRIUM PRICES EQUILIBRIUM TARIFF EXPORT PRICES EXPORT SUBSIDIES EXPORTERS EXPORTS EXTERNAL TARIFF EXTERNAL TARIFFS EXTERNALITIES EXTERNALITY FREE ACCESS FREE MOVEMENT FREE TRADE FREE TRADE AGREEMENTS FREE TRADE AREA GENERALIZED SYSTEM OF PREFERENCES IMPORT DEMAND IMPORT GOOD IMPORT PENETRATION IMPORTED GOODS IMPORTS INCOME
Online Access:	http://documents.worldbank.org/curated/en/2005/01/5617943/clash-liberalizations-preferential-versus-multilateral-trade-liberalization-european-union-clash-liberalizations-preferential-versus-multilateral-trade-liberalization-european-union http://hdl.handle.net/10986/8912

id	okr-10986-8912
recordtype	oai_dc
spelling	okr-10986-89122021-04-23T14:02:42Z The Clash of Liberalizations : Preferential versus Multilateral Trade Liberalization in the European Union Karacaovali, Baybars Limão, Nuno BALANCE OF PAYMENTS BENCHMARK BILATERAL TRADE COMMON TARIFF CONDITIONALITY CONSTANT RETURNS TO SCALE CONSUMER SURPLUS CONSUMER] PRICE CONSUMERS CUSTOMS CUSTOMS UNION CUSTOMS UNIONS DEMAND CURVES DETERMINATION PROCESS DEVELOPED COUNTRIES DISCOUNTED VALUE DOMESTIC PRICES ECONOMIC THEORY ECONOMISTS ELASTICITY EMPIRICAL EVIDENCE EMPLOYMENT ENVIRONMENTAL ISSUES ENVIRONMENTAL PROBLEMS EQUILIBRIUM EQUILIBRIUM PRICES EQUILIBRIUM TARIFF EXPORT PRICES EXPORT SUBSIDIES EXPORTERS EXPORTS EXTERNAL TARIFF EXTERNAL TARIFFS EXTERNALITIES EXTERNALITY FREE ACCESS FREE MOVEMENT FREE TRADE FREE TRADE AGREEMENTS FREE TRADE AREA GENERALIZED SYSTEM OF PREFERENCES IMPORT DEMAND IMPORT GOOD IMPORT PENETRATION IMPORTED GOODS IMPORTS INCOME 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. The authors 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. 2012-06-25T14:40:39Z 2012-06-25T14:40:39Z 2005-01 http://documents.worldbank.org/curated/en/2005/01/5617943/clash-liberalizations-preferential-versus-multilateral-trade-liberalization-european-union-clash-liberalizations-preferential-versus-multilateral-trade-liberalization-european-union http://hdl.handle.net/10986/8912 English en_US Policy Research Working Paper; No. 3493 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	BALANCE OF PAYMENTS BENCHMARK BILATERAL TRADE COMMON TARIFF CONDITIONALITY CONSTANT RETURNS TO SCALE CONSUMER SURPLUS CONSUMER] PRICE CONSUMERS CUSTOMS CUSTOMS UNION CUSTOMS UNIONS DEMAND CURVES DETERMINATION PROCESS DEVELOPED COUNTRIES DISCOUNTED VALUE DOMESTIC PRICES ECONOMIC THEORY ECONOMISTS ELASTICITY EMPIRICAL EVIDENCE EMPLOYMENT ENVIRONMENTAL ISSUES ENVIRONMENTAL PROBLEMS EQUILIBRIUM EQUILIBRIUM PRICES EQUILIBRIUM TARIFF EXPORT PRICES EXPORT SUBSIDIES EXPORTERS EXPORTS EXTERNAL TARIFF EXTERNAL TARIFFS EXTERNALITIES EXTERNALITY FREE ACCESS FREE MOVEMENT FREE TRADE FREE TRADE AGREEMENTS FREE TRADE AREA GENERALIZED SYSTEM OF PREFERENCES IMPORT DEMAND IMPORT GOOD IMPORT PENETRATION IMPORTED GOODS IMPORTS INCOME
spellingShingle	BALANCE OF PAYMENTS BENCHMARK BILATERAL TRADE COMMON TARIFF CONDITIONALITY CONSTANT RETURNS TO SCALE CONSUMER SURPLUS CONSUMER] PRICE CONSUMERS CUSTOMS CUSTOMS UNION CUSTOMS UNIONS DEMAND CURVES DETERMINATION PROCESS DEVELOPED COUNTRIES DISCOUNTED VALUE DOMESTIC PRICES ECONOMIC THEORY ECONOMISTS ELASTICITY EMPIRICAL EVIDENCE EMPLOYMENT ENVIRONMENTAL ISSUES ENVIRONMENTAL PROBLEMS EQUILIBRIUM EQUILIBRIUM PRICES EQUILIBRIUM TARIFF EXPORT PRICES EXPORT SUBSIDIES EXPORTERS EXPORTS EXTERNAL TARIFF EXTERNAL TARIFFS EXTERNALITIES EXTERNALITY FREE ACCESS FREE MOVEMENT FREE TRADE FREE TRADE AGREEMENTS FREE TRADE AREA GENERALIZED SYSTEM OF PREFERENCES IMPORT DEMAND IMPORT GOOD IMPORT PENETRATION IMPORTED GOODS IMPORTS INCOME Karacaovali, Baybars Limão, Nuno The Clash of Liberalizations : Preferential versus Multilateral Trade Liberalization in the European Union
relation	Policy Research Working Paper; No. 3493
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. The authors 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.
format	Publications & Research :: Policy Research Working Paper
author	Karacaovali, Baybars Limão, Nuno
author_facet	Karacaovali, Baybars Limão, Nuno
author_sort	Karacaovali, Baybars
title	The Clash of Liberalizations : Preferential versus Multilateral Trade Liberalization in the European Union
title_short	The Clash of Liberalizations : Preferential versus Multilateral Trade Liberalization in the European Union
title_full	The Clash of Liberalizations : Preferential versus Multilateral Trade Liberalization in the European Union
title_fullStr	The Clash of Liberalizations : Preferential versus Multilateral Trade Liberalization in the European Union
title_full_unstemmed	The Clash of Liberalizations : Preferential versus Multilateral Trade Liberalization in the European Union
title_sort	clash of liberalizations : preferential versus multilateral trade liberalization in the european union
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/01/5617943/clash-liberalizations-preferential-versus-multilateral-trade-liberalization-european-union-clash-liberalizations-preferential-versus-multilateral-trade-liberalization-european-union http://hdl.handle.net/10986/8912
_version_	1764407111632027648

The Clash of Liberalizations : Preferential versus Multilateral Trade Liberalization in the European Union

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