Why RTAs mitigate non-tariff protectionism:
An analysis of non-tariff measures, RTAs, and WTO Ministerial Conferences.
DOI:
https://doi.org/10.5752/P.1809-6182.2022v19n1p2-22Keywords:
large-scale negotiations, small-scale negotiations, non-tariff measures, WTO-plus provisions, WTO-extra provisionsAbstract
This paper aims to assess the effectiveness of large and small-scale negotiations to mitigate non-tariff measures (NTMs). The hypothesis hereby raised is the higher the number of WTO-plus and WTO-extra provisions in Regional Trade Agreements (RTAs), the lower the growth of the stock of NTMs reported to the WTO, and the higher the number of NTMs withdrawn by WTO members. To test it, linear regression tests are employed with data on RTAs and protectionism. In addition to being an unprecedented analysis of all NTMs notified to the WTO in the last 27 years, the main findings of this paper are: there is a moderate/weak negative correlation between the NTMs stock growth, WTO-extra, and WTO-plus provisions, as well as a moderate/weak positive correlation between these provisions and NTMs withdrawn by WTO members. These findings strengthen theories supporting RTAs as trade creators.
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References
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HAYAKAWA, K. Does the use of multiple FTAs force firms to raise local input share?: Evidence of the spaghetti bowl phenomenon. Economic Modelling, v. 33, p. 458-461, 2013.
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KEOHANE, R. After hegemony: Cooperation and discord in the world political economy. New Jersey: Princeton University Press, 1984.
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KOO, W. W.; KENNEDY, P. L.; SKRIPNITCHENKO, A. Regional preferential trade agreements: Trade creation and diversion effects. Review of Agricultural Economics, v. 28, p. 408-415, 2006.
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LAURIA, L. The relationship between regional trade agreements, non-tariff measures, and WTO ministerial conferences.. Brasília. 2018.
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LIMÃO, N. Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the United States. American Economic Review, v. 96, p. 896-914, 2006.
MAGEE, C. S. Trade creation, trade diversion, and the general equilibrium effects of regional trade agreements: a study of the European Community–Turkey customs union. Review of World Economics, v. 152, p. 383-399, 2016.
MANNIX, E. A.; THOMPSON, L.; BAZERMAN, M. H. Negotiation in small groups. Journal of Applied Psycology, v. 74, p. 508, 1989.
MCLAREN, J. A theory of insidious regionalism. The Quarterly Journal of Economics, p. 571-608, 2002.
MENON, J. From spaghetti bowl to jigsaw puzzle? Fixing the mess in regional and global trade. Asia & the Pacific Policy Studies, v. 3, p. 470-483, 2014.
NAIM, M. Minilateralism. Foreign Policy, 2009.
NORTH, D. Transaction Costs, Institutions, and Economic History. San Francisco: International Center for Economic Growth, 1992. 7-17 p.
OLSON, M. Logic of Collective Action: Public Goods and the Theory of Groups. Massachusetts: Harvard University Press, 1965.
PANAGARIYA, A.; FINDLAY, R. A political - economy analysis of free trade areas and customs unions. Washington. 1994.
PFAFFERMAYR, M. Trade creation and trade diversion of economic integration agreements revisited: a constrained panel pseudo-maximum likelihood approach. Review of World Economics, p. Review of World Economics, 2020.
RIEZMAN, R. Can bilateral trade agreements help induce free trade? Can. The Canadian Journal of Economics, p. 751-766, 1999.
RUGGIE, J. G. Multilateralism: the anatomy of an institution. International Organization, v. 46, p. 561-598, 1992.
SAGGI, K.; YILDIZ, H. Bilateralism, Multilateralism, and the Quest for Global Free Trade. Journal of International Economics, p. 26-37, 2010.
SIMMEL, G. The Sociology of Georg Simmel. New York: Simon and Schuster, 1950.
SORGHO, Z. RTAs' Proliferation and Trade‐diversion Effects: Evidence of the ‘Spaghetti Bowl’Phenomenon. The World Economy, v. 39, p. 285-300, 2016.
SPERO, J.; HART, J. The politics of international economic relations. Massachusetts: Cengage Learning, 2009.
VAMVAKIDIS, A. Regional Trade Agreements Versus Broad Liberalization : Which Path Leads to Faster Growth? Time-Series Evidence. Washington. 1998.
VINER, J. The Customs Union Issue. New York: Carnegie Endowment for International Peace, 1950.
YI, S. S. Endogenous formation of customs unions under imperfect competition: Open regionalism is good. Journal of International Economics, p. 153-177, 1996.
ANDERSON, J. E.; YOTOV, Y. V. Terms of trade and global efficiency effects of free trade agreements. Journal of International Economics, v. 99, p. 279-298, 2016.
BAGWELL, K.; BOWN, C. P.; STAIGER, R. W. Is the WTO passé? Journal of Economic Literature, v. 54, p. 1125-1231, 2016.
BAIER, S. L.; BERGSTRAND, J. H. Do free trade agreements actually increase members' international trade? Journal of International Economics, v. 71, p. 72-95, 2007.
BAIER, S. L; YOTOV, Y. V.; ZYLKIN, T. On the widely differing effects of free trade agreements: Lessons from twenty years of trade integration. Journal of International Economics, v. 116, p. 206-226, 2019.
BALDWIN, ; FREUND, C. Preferential trade agreements and multilateral liberalization. Preferential Trade Agreement Policies for Development - A Handbook. Washington: World Bank, 2011.
BALDWIN, R. The World Trade Organization and the future of multilateralism. Journal of Economic Perspectives, v. 30, p. 95-116, 2016.
BALDWIN, R.; LOW, P. Multilateralizing regionalism: challenges for the global trading system. Geneva: Cambridge University Press, 2009.
BALDWIN, R.; SEGHEZZA, E. Are Trade Blocs Building or Stumbling Blocks. Journal Of Economic Integration, v. 25, p. 276-297, 2010.
BHAGWATI, J. Regionalism versus Multilateralism. The World Economy, v. 1992, p. 535-556, 1992.
BHAGWATI, J. US Trade Policy: The Infatuation with FTA. Washington: American Economic Association. 1995. p. 1-23.
BHAGWATI, J. The world trading system at risk. New Jersey: Princeton University Press, 2016.
BHAGWATI, J.; PANAGARIYA, A. Preferential Trading Areas and Multilateralism: Strangers, Friends or Foes? New York. 1996.
BOHARA, A. K.; GAWANDE, ; SANGUINETTI, P. Trade diversion and declining tariffs: evidence from MERCOSUR. Journal of International Economics, p. 65-88, 2004.
CALVO-PARDO, H.; FREUND, C.; ORNELAS, E. The ASEAN Free Trade Agreement: Impact on Trade Flows and External Trade Barriers. Washington. 2009.
CHAFER, C.; GIL-PAREJA, S.; LLORCA-VIVERO, R. Warning: Bilateral trade agreements do not create trade. Bulleting of Economic Research, 2021.
DAI, M.; YOTOV, Y. V.; ZYLKIN, T. On the trade-diversion effects of free trade agreements. Economic Letters, v. 122, p. 321-325, 2014.
DÜR, A.; BACCINI, L.; MANFRED, E. The design of international trade agreements: Introducing a new database. Review of International Organizations, p. 1-39, 2014.
ESTEVADEORDAL, A.; FREUND, C.; ORNELAS, E. Does regionalism affect trade liberalization towards non-members? Washington. 2008.
FELBERMAYR, G. et al. Macroeconomic potentials of transatlantic free trade: A high resolution perspective for Europe and the world. Economic Policy, v. 30, p. 491-537, 2015.
FOROUTAN, F. Does Membership in a Regional Preferential Trade Arrangement Make a Country More or Less Protectionist. World Economy, v. 21, p. 305-335, 1998.
FRAGA, E. D. A. A OMC e a teoria das negociações econômicas internacionais (John Odell): o comportamento dos atores nas conferências ministeriais de Cancun e Hong Kong. Brasília. 2016.
FRANKEL, J. A.; WEI, S.-J. Regionalization of World Trade and Currencies: Economics and Politics. In: FRANKEL, J. A. The Regionalization of the World Economy. Chicago: University of Chicago Press, 1998. p. 189-226.
GILPIN, R. The political economy of international relations. New Jersey: Princeton University Press, 1987.
HANCKÉ, B. Intelligent Research Design: A Guide for Beginning Researchers in the Social Sciences Illustrated. London: Oxford University Press, 2009.
HARE, P. A study of interaction and consensus in different sized groups. American Sociological Review, v. 17, p. 261-267, 1952.
HAYAKAWA, K. Does the use of multiple FTAs force firms to raise local input share?: Evidence of the spaghetti bowl phenomenon. Economic Modelling, v. 33, p. 458-461, 2013.
HINCKE, D. E.; WIERSMA, W.; JURS, S. G. Applied Statistics for the Behavioral Sciences. Boston: Houghton Mifflin, 2003.
IRWIN, D. A. Multilateral and bilateral trade policies in the world trading system: an historical perspective. In: PANAGARIYA, J. New dimensions in Regional Integration. London: Cambridge Center of Economic Policy Research, 1993. p. 90-119.
JAMES, J. A preliminary study of the size determinant in small group interaction. American sociological review, v. 16, p. 474-477, 1951.
KAHLER, M. Multilateralism with small and large numbers. International Organization, v. 46, p. 681-708, 1992.
KEMP, M.; WAN, H. An elementary proposition concerning the formation of customs unions. Journal of International Economics, v. 6, p. 95-98, 1976.
KEOHANE, R. After hegemony: Cooperation and discord in the world political economy. New Jersey: Princeton University Press, 1984.
KOMORITA, S.; HAMILTON, T. P.; KRAVITZ, D. A. Effects of alternatives in coalition bargaining. Journal of Experimental Social Psychology, v. 20, p. 116-136, 1984.
KOO, W. W.; KENNEDY, P. L.; SKRIPNITCHENKO, A. Regional preferential trade agreements: Trade creation and diversion effects. Review of Agricultural Economics, v. 28, p. 408-415, 2006.
KRISHNA, P. Regionalism and multilateralism: a political economy approach. The Quarterly Journal of Economics, v. 113, p. 227-251, 1998.
KRUGMAN, P. The move toward free trade zones. Economic Review, v. 76, p. 5-25, 1991.
LASKI, H. J. Liberty in the Modern State (Works of Harold J. Laski). New York: Routledge, 2016.
LAURIA, L. Cooperação, discórdia e protecionismo não tarifários em negociações internacionais.. Brasília. 2017.
LAURIA, L. The relationship between regional trade agreements, non-tariff measures, and WTO ministerial conferences.. Brasília. 2018.
LAWRENCE, R. Z. Regionalism, Multilateralism, and Deeper Integration. Washington: Brookings Institution Press, 1996.
LESSER, C. Do Bilateral and Regional Approaches for Reducing Technical Barriers to Trade Converge Towards the Multilateral Trading System? [S.l.]. 2007.
LIMÃO, N. Preferential Trade Agreements as Stumbling Blocks for Multilateral Trade Liberalization: Evidence for the United States. American Economic Review, v. 96, p. 896-914, 2006.
MAGEE, C. S. Trade creation, trade diversion, and the general equilibrium effects of regional trade agreements: a study of the European Community–Turkey customs union. Review of World Economics, v. 152, p. 383-399, 2016.
MANNIX, E. A.; THOMPSON, L.; BAZERMAN, M. H. Negotiation in small groups. Journal of Applied Psycology, v. 74, p. 508, 1989.
MCLAREN, J. A theory of insidious regionalism. The Quarterly Journal of Economics, p. 571-608, 2002.
MENON, J. From spaghetti bowl to jigsaw puzzle? Fixing the mess in regional and global trade. Asia & the Pacific Policy Studies, v. 3, p. 470-483, 2014.
NAIM, M. Minilateralism. Foreign Policy, 2009.
NORTH, D. Transaction Costs, Institutions, and Economic History. San Francisco: International Center for Economic Growth, 1992. 7-17 p.
OLSON, M. Logic of Collective Action: Public Goods and the Theory of Groups. Massachusetts: Harvard University Press, 1965.
PANAGARIYA, A.; FINDLAY, R. A political - economy analysis of free trade areas and customs unions. Washington. 1994.
PFAFFERMAYR, M. Trade creation and trade diversion of economic integration agreements revisited: a constrained panel pseudo-maximum likelihood approach. Review of World Economics, p. Review of World Economics, 2020.
RIEZMAN, R. Can bilateral trade agreements help induce free trade? Can. The Canadian Journal of Economics, p. 751-766, 1999.
RUGGIE, J. G. Multilateralism: the anatomy of an institution. International Organization, v. 46, p. 561-598, 1992.
SAGGI, K.; YILDIZ, H. Bilateralism, Multilateralism, and the Quest for Global Free Trade. Journal of International Economics, p. 26-37, 2010.
SIMMEL, G. The Sociology of Georg Simmel. New York: Simon and Schuster, 1950.
SORGHO, Z. RTAs' Proliferation and Trade‐diversion Effects: Evidence of the ‘Spaghetti Bowl’Phenomenon. The World Economy, v. 39, p. 285-300, 2016.
SPERO, J.; HART, J. The politics of international economic relations. Massachusetts: Cengage Learning, 2009.
VAMVAKIDIS, A. Regional Trade Agreements Versus Broad Liberalization : Which Path Leads to Faster Growth? Time-Series Evidence. Washington. 1998.
VINER, J. The Customs Union Issue. New York: Carnegie Endowment for International Peace, 1950.
YI, S. S. Endogenous formation of customs unions under imperfect competition: Open regionalism is good. Journal of International Economics, p. 153-177, 1996.
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Published
2023-11-15
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Baggi, L. (2023). Why RTAs mitigate non-tariff protectionism:: An analysis of non-tariff measures, RTAs, and WTO Ministerial Conferences. Conjuntura Internacional, 19(1), 2–22. https://doi.org/10.5752/P.1809-6182.2022v19n1p2-22
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