Explaining Managed Trade as Rational Cheating |
| |
| Authors: | Andrew R. Dick |
| |
| Affiliation: | Dick: University of California at Los Angeles, 405 Hilgard Avenue, Los Angeles, CA 90024–1477, USA. Tel: 310-206-8408, Fax: 825-9528, Email: . I thank the referee, Avinash Dixit, Arnold Harberger, Arye Hillman, Leo Kahane, Howard Marvel, Ian Wootton, and seminar participants at AEA and WEA conferences, the University of Colorado, UCLA, and the Southern California Political Economy Seminar for comments. Edward Learner, Edward Ray and Joseph Stone kindly supplied much of the data. Ken Serwin and Geoffrey Waring supplied excellent research assistance. I gratefully acknowledge financial support from UCLA's International Studies Overseas Program. I am responsible for any remaining shortcomings. |
| |
| Abstract: | Postwar “managed-trade” policies feature low baseline tariffs combined with selective nontariff protection. This paper interprets managed trade as a rational strategy to undermine trade-liberalization agreements in the absence of credible external enforcement. Analyzing the Kennedy GATT Round, I explore the calculus that led the United States to undermine across-the-board tariff reductions selectively by introducing nontariff barriers in industries with rapidly rising import demand. I show empirically that nontariff barrier dynamics across 216 industries support a rational-cheating interpretation of managed-trade policy. |
| |
| Keywords: | |
|
|
