FREE TRADE NETWORKS WITH TRANSFERS*

We investigate the network of bilateral free trade agreements (FTAs) in the context of a network formation game with transfers. In a previous paper we showed that without international transfers countries with different industrialization levels cannot sign an FTA, so that the global free trade network, in which every pair of countries signs an FTA, is not in general pairwise‐stable. In this paper we show that, even if the world consists of fairly asymmetric countries, the global free trade network is pairwise‐stable when transfers between FTA signatories are allowed. Moreover, it is a unique pairwise‐stable network unless industrial commodities are highly substitutable.     

外部关税约束、自由贸易区规模与世界自由贸易

该文在外部关税约束条件下分析了几种不同类型的自由贸易区与世界自由贸易的关系,该文结果显示,一个实行开放成员国地位的自由贸易区可以实现世界自由贸易,但是当自由贸易区以追求成员国福利最大化为目标时,在世界规模大于4时,该自由贸易区的扩张不可能最终实现世界自由贸易.该文还研究了对称的自由贸易区是否可以通过进一步的融合从而把世界变成一个一体化的自由贸易区,结果显示,具有对称市场能力的自由贸易区可以通过进一步的融合提高成员国福利,从而最终实现世界自由贸易.     

FREE TRADE, NATIONALISM, AND THE COMMON MAN: THE FREE TRADE AGREEMENT BETWEEN CANADA AND THE UNITED STATES

This paper discusses the forces that have been at play in the debate over the recently concluded Canada-U.S. Free Trade Agreement. Most economists agree that free trade is desirable and that both parties likely will gain from specialization and exchange. But many objections to this agreement have been raised, some of which are very different from those that economists usually consider. A review of the agreement and many of the arguments raised against it reinforces the basic credo that freer exchange between consenting parties leads to improved economic well-being.     

TRADE LIBERALIZATION AND COMPENSATION*

Liberalization harms some groups while generating aggregate benefits. We consider various labor market policies that might be used to compensate those who lose from freer trade. Our goal is to find the policy that compensates each group of losers at the lowest cost to the economy. We argue that wage subsidies should be used to compensate those who bear the adjustment costs triggered by liberalization whereas employment subsidies should be used to compensate those who remain trapped in the previously protected sector. Our analysis indicates that the cost of compensation is low, provided that the right policy is used.     

BILATERALISM IN THE INTERWAR WORLD ECONOMY*

Discriminatory protectionist policies in the 1930s are assumed to have led to a collapse of multilateral trading patterns. This paper examines the trends in bilateralism during the interwar period for a sample of ten countries. The findings show that, with the exception of Germany between 1934 and 1938, the level of bilateralism fluctuated but did not see a significant trend increase in the period of increased protectionism during the 1930s.     

NORTH AMERICAN FREE TRADE: OPPORTUNITIES AND PITFALLS

Most studies of the impacts of the North American Free Trade Agreement assume that once the agreement is in place, it will remain in place. Some common theories of trade and of special interest groups' influences upon government policy call these assumptions into question. If ratification of the agreement represents a loss for some import-competing special interest groups, the loss likely will be only of a battle in a war that continues. Attempts to abridge the effects of the agreement may succeed even if the agreement itself is not abridged. U.S. special interest groups rather than their Mexican counterparts will make the majority of these attempts.     

WHY A FREE TRADE AREA? THE TARIFF ALSO RISES*

This paper considers the choice between a customs union (wherein partners share a common external tariff) and a free trade area (wherein each partner chooses its own tariff against non-members). Following the result that a customs union dominates a free trade area, with coordination of domestic tax policies, we show that a free trade area may nevertheless be chosen if tariffs are determined endogenously through industry lobbying. This is so even when the free trade area equates producer prices within its borders and induces tariff revenue competition and whether or not there is domestic free-riding in lobbying.     

OCEAN SHIPPING ECONOMICS: FREE TRADE AND ANTITRUST IMPLICATIONS

Many economists and antitrust experts claim that ocean shipping conferences are essentially legalized cartels. They often advocate eliminating ocean shipping conferences' antitrust immunity. This paper argues that conferences also help to coordinate their members' joint investments and thereby allow the historically small firms in this industry to exploit vast network economies (akin to those in other transportation industries) that small firms could not capture on their own. The paper proposes reducing rather than eliminating immunity and calls for an end to many of the regulations currently stifling the industry.     

关于绥芬河辟建自由经贸区的探讨

绥芬河是沿边开放的内陆口岸城镇,以单一的、且层次较低的商贸业为其主导产业。本文分析了其必然性和发展障碍,认为辟建内陆边境的自由经济贸易区应是保障持续发展的一种产业开发模式。     

FREE TRADE AREAS AND RULES OF ORIGIN: ECONOMICS AND POLITICS

Incorporating an intermediate input into a simple small-union general-equilibrium model, this paper first develops the welfare economics of preferential trading under the rules of origin (ROO) and then demonstrates that ROOs can improve the political viability of Free Trade Agreements (FTAs). Two interesting outcomes are derived. First, a welfare-reducing FTA that was rejected in the absence of ROOs can become feasible in the presence of these rules. Second, a welfare- improving FTA that was rejected in the absence of ROOs can be endorsed in their presence, but upon endorsement it can become welfare inferior relative to the status quo.     

INTERNATIONAL TRADE AND INDUSTRIAL DYNAMICS*

In this article, industrial evolution is driven by endogenous technology choices of firms, generating a rich environment that includes the possibility of a dramatic shakeout. The likelihood, magnitude, and timing of this shakeout are characterized and depend not only on the size of an innovation but also on cost structure. In this setting, trade liberalization reduces the likelihood of a shakeout, resulting in more stable industrial structures. However, when shakeouts arise in global markets, the distribution of exits can vary widely across countries. Furthermore, conditions exist where a shakeout occurs in a closed economy but not in an open economy.     

NORTH AMERICAN FREE TRADE AGREEMENT BILATERAL TRADE EFFECTS

This study evaluates the effects of the North American Free Trade Agreement (NAFTA) on bilateral trade between the United States and Canada and between the United States and Mexico. Trade flow estimates are from a vector autoregression (VAR) model. The VAR methodology allows modeling bilateral trade in a flexible manner that incorporates both the interaction between different variables and the dynamics of trade, output, prices, and the exchange rate. After testing the outside sample forecasting ability of the models, the study produces dynamic forecasts of bilateral trade. It then compares forecasts incorporating the effects of the NAFTA with baseline forecasts. The results suggest expanded trade for all three countries and an improvement in the U.S. trade position with both Canada and Mexico.     

TRANSPORTATION INFRASTRUCTURE INVESTMENTS AND TRADE LIBERALIZATION*

This paper examines the gains from cooperative agreements on transportation infrastructure investments when there are terms of trade and technological spillovers between countries. In a two ‐country model, cooperation on investment levels will result in a lower level of transport costs. However, the cooperative equilibrium may have a higher or lower level of infrastructure investment between the partner countries in the case of preferential liberalization. The paper also addresses the desirability of linking trade and infrastructure agreements when investment choices can be used strategically.     

TRADE CREATION AND DIVERSION EFFECTS OF THE U.S.-CANADIAN FREE TRADE AGREEMENT

This study empirically estimates and evaluates the economic benefits of the U.S. and Canadian Free Trade Agreement (FTA). Most past studies rely on aggregate data. The analysis here emphasizes the trade effects of removing tariff and nontariff barriers on each commodity group classified by the Standard International Trade Classification. Estimating the amount of trade expansion under FTA for both countries involves using the import demand elasticities from a dynamic demand model. Results show that U.S. imports from Canada are more sensitive to domestic, import, and world prices than are Canadian imports from the United States. U.S. imports from Canada would increase roughly £3.257 billion compared to the £2.432 billion increase for Canadian imports from the United States .