Externalities and Free Trade Agreements

Grafe,; Mauleon,

doi:10.2307/20076242

Cited by 4 publications

(3 citation statements)

References 24 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Instead, in their model, the incentive to negotiate PTAs is based on comparative advantage. Grafe and Mauleon (2000) have studied the consequences of a private externality on free trade agreements in a general equilibrium framework.…”

Section: The Modelmentioning

confidence: 99%

Networks of Free Trade Agreements Among Heterogeneous Countries

2006

View full text Add to dashboard Cite

The paper examines the formation of free trade agreements as a network formation game. We consider a three-country model in which international trade occurs between economies with imperfectly competitive product markets. Labor markets can be unionized and non-unionized in each country. We show that if all countries are of the same type (all of them are either unionized or non-unionized), the global free trade network is both the unique pairwise stable network and the unique efficient network. If some countries are unionized while others are non-unionized, other networks apart from the global free trade network are likely to be pairwise stable. However, the efficient network is always the global free trade network. Thus, a conflict between stability and efficiency may occur. Moreover, starting from the network in which no country has signed a free trade agreement, all sequences of networks due to continuously profitable deviations do not lead (in most cases) to the global free trade network, even when global free trade is stable.

show abstract

Section: The Modelmentioning

confidence: 99%

Networks of Free Trade Agreements Among Heterogeneous Countries

2006

View full text Add to dashboard Cite

show abstract

“…7 7 Kennan and Riezman (1990), and Bond and Syropoulos (1996) studied the strategic stability of particular trading regimes. Grafe and Mauleon (2000) studied the consequences of a private externality on the formation of free trade agreements in a general equilibrium framework. …”

mentioning

confidence: 99%

Networks of Free Trade Agreements among Heterogeneous Countries

Mauleón

Song

Vannetelbosch

2010

J Public Economic Theory

View full text Add to dashboard Cite

The paper examines the formation of free trade agreements as a network formation game. We consider an n-country model in which international trade occurs between economies with imperfectly competitive product markets. In each country, the labor market is either unionized or non-unionized. We show that, if all countries are non-unionized, the global free trade network is both the unique pairwise stable network and the unique efficient network. If all countries are unionized, the global free trade network is pairwise stable and the unique efficient network among the class of symmetric networks. If some countries are unionized while others are non-unionized, other networks apart from the global free trade network may be pairwise stable. However, the efficient network is still the global free trade network. Thus, a conflict between stability and efficiency may occur. Moreover, starting from the network in which no country has signed a free trade agreement, all sequences of networks due to continuously profitable deviations do not lead (in most cases) to the global free trade network, even when global free trade is stable. Copyright © 2010 Wiley Periodicals, Inc..

show abstract

“…Nevertheless, if governments want to increase national income, the manifest political constraints among governments must be overcome. Some final arguments against FTAs are presented by Grafe & Mauleon (2000).…”

Section: Free Trade and Free Trade Agreementsmentioning

confidence: 99%

Economic Impacts of the Free Trade Agreement Between the European Union and Colombia

Tejedor Estupiñán

View full text Add to dashboard Cite

The main purpose of this thesis is to develop a multidisciplinary assessment on the economic and social effects of the Free Trade Agreement (FTA) signed in 2012 by the European Union (EU) and Colombia. The EU - Colombia FTA is a multilateral and intra-regional trade agreement, where the developed region is represented by the EU-28 countries, and the developing region is represented by Colombia. Firstly, the theoretical framework includes a brief review of the evolution of free trade and free trade agreements theories since the 16th century, and also includes the most important critics of the trade doctrine developed by the well-known Dependency Theory, the Theory of Uneven Development and the arguments presented by John Maynard Keynes in favour of Protectionism. Secondly, this thesis incorporates a brief review of the historical evolution of the international integration process of the EU and Colombia, and also a description of the context, and structure of the FTA. Thirdly, the thesis is based on a multidisciplinary methodological approach that includes a horizontal depth analysis, a qualitative analysis of trade creation and trade diversion effects, and an analysis of two trade indicators such as the trade intensity index (TII) and the trade complementarity index (TCI). Finally, it includes a new multidimensional indicator called Development and Integration Perception Index (DIPI), which is a useful tool for identifying and assessing the countries’ profiles regarding their level of human development, international economic integration and democratic stability. Future research will create a rank and score based on the DIPI for most of the regions and countries around the world. Finally, the main conclusions show that: • Partial equilibrium models, gravity equation models and computable general equilibrium analysis are the most used models for assessing the impacts of FTAs on welfare and trade of signing economies and regions. These models include both ex-ante and ex-post liberalization trade analysis. Nevertheless, they models do not pay attention to the social impacts of an FTA, for example, the impacts on the human development, labour rights, and welfare systems, among others. • Despite the EU and Colombia FTA is a relatively high depth agreement, the legal enforceability of social provisions is quite weak in the agreement affecting the implementation of the labour provisions and the achievement of trade and social ambitions. The EU commitment in promoting human rights and improving labour conditions among its trade partners, in this case Colombia is very weak. • The data show that after the FTA entered into force the Colombian exports of goods to the EU decreased while the EU exports to Colombia increased. Regarding services, the data show that the Colombian exports of services to the EU grew significantly less than the EU exports of services to Colombia. The information by product shows that EU imports from Colombia are mainly commodities, while the main products imported by Colombia are specially industrialized goods. • The Vinerian qualitative analysis of the EU and Colombia FTA evidenced that the impact of tariff liberation derived from the EU-Colombia FTA is generating uneven trade creation and trade diversion effects for both the EU and Colombia. When the expected economic effects of the FTA implementation between developed and developing countries are uneven, it means that developing countries such as Colombia have less opportunities to exploit the benefits of an FTA. • The results of the new DIPI show that Colombia has serious development gaps in comparison with Germany, mainly in such areas as innovative and competitive development, human development and labour rights, democracy and corruption. The lack of productive jobs and competitive wages for men and women negatively affects the Colombian level of competitiveness, preventing a successful integration into the international economy. • The causes of the uneven performance of the balance of trade and distribution of the benefits of the EU-Colombia FTA, are explained by the asymmetrical interdependencies among the partners. In addition, Colombia has not been developing a thrusting environment, regulatory mechanisms and supply chain logistics which can help the country to export its products and services to the EU market in an efficient way. It is necessary to improve policies such as the removal of other quantitative restrictions, labour market regulations, reform of government administration, laws against corruption and tax laws.

show abstract

Externalities and Free Trade Agreements

Cited by 4 publications

References 24 publications

Networks of Free Trade Agreements Among Heterogeneous Countries

Networks of Free Trade Agreements Among Heterogeneous Countries

Networks of Free Trade Agreements among Heterogeneous Countries

Economic Impacts of the Free Trade Agreement Between the European Union and Colombia

Contact Info

Product

Resources

About