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Free trade agreements without delocation

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  • Richard E. Baldwin
  • Frederic Robert-Nicoud

Abstract

Small nations fear that FTAs with larger, richer nations will erode their industrial bases. These concerns are recognized in FTA and multilateral talks: small nations may explicitly or implicitly maintain higher trade barriers. Using a model where symmetric liberalization de-industrializes small, poor nations, we characterize the path of protection-asymmetries that allow liberalization without delocation. In welfare terms, the large nation prefers this no-delocation liberalization scheme only when barriers are sufficiently high; the small nation's ranking is reversed. An anti-delocation scheme involving international income transfers is also evaluated and found infeasible.

Suggested Citation

  • Richard E. Baldwin & Frederic Robert-Nicoud, 2000. "Free trade agreements without delocation," Canadian Journal of Economics, Canadian Economics Association, vol. 33(3), pages 766-786, August.
    • Handle: RePEc:cje:issued:v:33:y:2000:i:3:p:766-786
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    Cited by:

    1. Toulemonde, Eric, 2006. "Acquisition of skills, labor subsidies, and agglomeration of firms," Journal of Urban Economics, Elsevier, vol. 59(3), pages 420-439, May.
    2. Asrat Tesfayesus, 2016. "Liberalization Agreements in the GATT/WTO and the Terms-of-trade Externality Theory: Evidence from Three Developing Countries," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 1000-1022, November.
    3. Robert-Nicoud, Frederic & Sbergami, Federica, 2004. "Home-market vs. vote-market effect: Location equilibrium in a probabilistic voting model," European Economic Review, Elsevier, vol. 48(1), pages 155-179, February.
    4. Takatsuka, Hajime & Zeng, Dao-Zhi, 2016. "Nontariff protection without an outside good," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 65-78.
    5. Pascal Mossay & Takatoshi Tabuchi, 2015. "Preferential Trade Agreements Harm Third Countries," Economic Journal, Royal Economic Society, vol. 125(589), pages 1964-1985, December.
    6. Volker Nocke, 2006. "A Gap for Me: Entrepreneurs and Entry," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 929-956, September.
    7. Ralph Ossa, 2011. "A "New Trade" Theory of GATT/WTO Negotiations," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 122-152.
    8. Takatsuka, Hajime & Zeng, Dao-Zhi, 2012. "Trade liberalization and welfare: Differentiated-good versus homogeneous-good markets," Journal of the Japanese and International Economies, Elsevier, vol. 26(3), pages 308-325.
    9. Fugazza, Marco & Robert-Nicoud, Frédéric, 2006. "Can South-South trade Liberalisation Stimulate North-South Trade ?," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 234-253.
    10. Hajime Takatsuka & Dao-Zhi Zeng, 2011. "Economic Integration and Welfare: Manufacturing vs. Agricultural Markets," ERSA conference papers ersa11p1720, European Regional Science Association.
    11. Álvarez López , M.ª Elisa & Myro Sánchez, Rafael & Vega Crespo, Josefa, 2012. "Delocation in the manufacturing sectors in the EU. A regional overview," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 22, pages 5-34.
    12. Bagwell, Kyle & Staiger, Robert W., 2015. "Delocation and trade agreements in imperfectly competitive markets," Research in Economics, Elsevier, vol. 69(2), pages 132-156.
    13. Martín Tobal, 2017. "Regulatory Entry Barriers, Rent Shifting and the Home Market Effect," Review of International Economics, Wiley Blackwell, vol. 25(1), pages 76-97, February.
    14. Frédéric Robert-Nicoud, 2006. "Agglomeration and Trade with Input–Output Linkages and Capital Mobility," Spatial Economic Analysis, Taylor & Francis Journals, vol. 1(1), pages 101-126.
    15. Frédéric Robert-Nicoud & Federica Sbergami, 1999. "Endogenous Regional Policy in a Model of Agglomeration," IHEID Working Papers 02-2001, Economics Section, The Graduate Institute of International Studies.
    16. Monika Mrazova, 2009. "Trade negotiations when market access matters," Economics Series Working Papers 447, University of Oxford, Department of Economics.
    17. Pascal Mossay & Takatoshi Tabuchi, 2011. "A Note on the Decomposition Technique of Economic Indices," CIRJE F-Series CIRJE-F-811, CIRJE, Faculty of Economics, University of Tokyo.
    18. Susanna Thede, 2005. "Trade policy formation when geography matters for specialisation," Working Papers 200519, School of Economics, University College Dublin.
    19. Thede, Susanna, 2007. "Trade and Agglomeration: the Strategic use of Protection Revisited," Working Papers 2007:7, Lund University, Department of Economics.

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