Small is Beautiful: Preferential Trade Agreements and the Impact of Country Size, Market Share, and Smuggling

Schiff, Maurice

doi:10.11130/jei.1997.12.3.359

Cited by 51 publications

(45 citation statements)

References 16 publications

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“…More formal analyses include Bhagwati and Panagariya (1996), Michaely (1998), Panagariya (1996Panagariya ( , 1997Panagariya ( , 1999 and Schiff (1997). Most studies use a partial equilibrium approach, while Michaely (1998) uses a diagrammatic general equilibrium framework to obtain the same results.…”

Section: Traditional Analysismentioning

confidence: 99%

Will the Real "Natural Trading Partner" Please Stand Up?

Schiff¹

2001

JEI

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Adherents to the "natural trading partner" hypothesis argue that forming a PTA is more likely to raise welfare if member countries already trade disproportionately with each other. Opponents of the hypothesis claim that the opposite is true: welfare is likely to be higher if member countries trade less with each other. This paper shows that neither analysis is correct and that the "natural trading partner" hypothesis can be rescued if it is redefined in terms of complementarity or substitutability rather than in terms of volume of trade.• JEL Classifications: F02, F13, F15

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Section: Traditional Analysismentioning

confidence: 99%

Will the Real "Natural Trading Partner" Please Stand Up?

Schiff¹

2001

JEI

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“…If, after integration, trade continued with the (large) rest of the world, A's internal prices would not change, there would be no consumer gains and consequently joining a customs union would merely give away tariff revenue, see, for example, Bhagwati and Panagariya [1996] or Schiff [1996].…”

Section: All That Matters Is the Delivered Price Of B's Exports To Amentioning

confidence: 99%

Transport Costs and "Natural" Integration in Mercosur

Amjadi¹

1999

JEI

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“…14 Schiff (1997) argues, however, that small countries gain more than large countries in preferential trade agreements, but abstract from bargaining power issues. 15 The attitude of the US until the late 80s towards bilateral agreements, as described by Panagariya (1998) We run regressions for agriculture and industry and for first and second periods separately, but coefficients were not statistically different and therefore the results reported in table 5 below are those for pooled regressions on total shares.…”

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Preferential and Non-Preferential Trade Flows in World Trade

Grether¹,

Olarreaga²

1998

WTO Working Papers

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Abstract. This paper quantifies the extent of preferential trade as a share of total world trade in different regions of the world and for two periods. Results show that: i) preferential trade represented 40% of world trade in the period 1988-1992 and it slightly increased to 42% during the period [1993][1994][1995][1996][1997]; ii) during the second period, agricultural products generally benefited more from the existence of preferential trade agreements than industrial products (maybe due to GATT-exemption); iii) the regional distribution of preferential trade is relatively uneven with a significant share of preferential We are indebted to Sanoussi Bilal, Patrick Low and Jaime de Melo for helpful comments. We are also grateful to Mariana Gagliardi and Daniel Morales from SISD-WTO for providing us with information on existing preferential trade agreements and to Philip Rauh for patient help with data collection. All errors are ours. The views expressed here are those of the authors and do not necessarily reflect those of the institutions with which they are associated.University of Geneva Some authors provide such estimates, but only for a particular region, as Sapir (1998) for the European Community. However, to provide an estimate for the share of preferential trade in world trade using this method faces the constraint that customs statistic are often difficult to obtain, if not confidential in many countries.The aim of this paper is to quantify the share of world trade that occurs under preferential trade agreements (PTAs) using a parallel method. The approach we followed is to proxy the actual share of trade that enters under preferential treatment by considering only imports within a PTA that take place under tariff lines where the MFN tariff is higher than 3 percent.The idea is that if the MFN tariff is below 3 percent, then incentives to satisfy rules of origin, and therefore benefit from preferential treatment vanish. For preferences under the 3 Generalized System of Preferences (GSP) we only included imports where there are full preferences (i.e., duty free) and no quantitative limitations. We identify PTA by using WTO notifications to article XXIV and the enabling clause by members and accession countries (e.g., China).Shares of preferential trade were calculated using two different averages: an import-weighted average of countries in the sample which indicates the "true" share of preferential trade in the world or region, and a non-weighted average, which indicates the extent of preferential trade in the "representative" country. Hence, the import-weighted average naturally tend to give more importance to large trading countries, whereas the non-weighted average gives more importance to small trading countries.

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Small is Beautiful: Preferential Trade Agreements and the Impact of Country Size, Market Share, and Smuggling

Cited by 51 publications

References 16 publications

Will the Real "Natural Trading Partner" Please Stand Up?

Will the Real "Natural Trading Partner" Please Stand Up?

Transport Costs and "Natural" Integration in Mercosur

Preferential and Non-Preferential Trade Flows in World Trade

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