IDEAS home Printed from https://ideas.repec.org/a/wly/apecpp/v44y2022i3p1424-1439.html
   My bibliography  Save this article

The United States' power‐based bargaining and the WTO: Has anything really been gained?

Author

Listed:
  • Ian M. Sheldon

Abstract

In this article, adoption of “power‐based” bargaining by the United States in trade negotiations is evaluated. A simple game‐theoretic structure highlights use of “bargaining” tariffs by the United States elicited credible retaliation by China through a trigger strategy, bilateral tariffs returning to a Nash equilibrium. This has come at some cost to US consumers, taxpayers, and farmers, although the latter group has regained market share following implementation of the US–China Phase One Trade Agreement. Unfortunately, the Agreement fails to deal with a key reason for the trade war, the Chinese economic model, and China's use of implicit subsidies.

Suggested Citation

  • Ian M. Sheldon, 2022. "The United States' power‐based bargaining and the WTO: Has anything really been gained?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1424-1439, September.
    • Handle: RePEc:wly:apecpp:v:44:y:2022:i:3:p:1424-1439
    DOI: 10.1002/aepp.13224
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/aepp.13224
    Download Restriction: no
    File URL: https://libkey.io/10.1002/aepp.13224?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. David Autor & David Dorn & Gordon Hanson & Kaveh Majlesi, 2020. "Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure," American Economic Review, American Economic Association, vol. 110(10), pages 3139-3183, October.
    2. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    3. Chad P. Bown & Douglas Irwin, 2018. "What Might a Trump Withdrawal from the World Trade Organization Mean for US Tariffs?," Policy Briefs PB18-23, Peterson Institute for International Economics.
    4. Aaditya Mattoo & Robert W Staiger, 2020. "Trade wars: What do they mean? Why are they happening now? What are the costs?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 35(103), pages 561-584.
    5. Tetyana Payosova & Gary Clyde Hufbauer & Jeffrey J. Schott, 2018. "The Dispute Settlement Crisis in the World Trade Organization: Causes and Cures," Policy Briefs PB18-5, Peterson Institute for International Economics.
    6. Kyle Bagwell & Robert W. Staiger, 2006. "Will International Rules on Subsidies Disrupt the World Trading System?," American Economic Review, American Economic Association, vol. 96(3), pages 877-895, June.
    7. Garred, Jason, 2018. "The persistence of trade policy in China after WTO accession," Journal of International Economics, Elsevier, vol. 114(C), pages 130-142.
    8. Richard Baldwin, 2016. "The World Trade Organization and the Future of Multilateralism," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 95-116, Winter.
    9. Bown, Chad P. & Keynes, Soumaya, 2020. "Why Trump shot the Sheriffs: The end of WTO dispute settlement 1.0," Journal of Policy Modeling, Elsevier, vol. 42(4), pages 799-819.
    10. Kyle Bagwell & Robert W. Staiger, 2011. "What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization," American Economic Review, American Economic Association, vol. 101(4), pages 1238-1273, June.
    11. Joost Pauwelyn, 2019. "WTO Dispute Settlement Post 2019: What to Expect?," Journal of International Economic Law, Oxford University Press, vol. 22(3), pages 297-321.
    12. Nicholas R. Lardy, 2019. "The State Strikes Back: The End of Economic Reform in China?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 7373, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jakubik, Adam & Keck, Alexander & Piermartini, Roberta, 2022. "Trade policy implications of a changing world: Tariffs and import market power," WTO Staff Working Papers ERSD-2022-14, World Trade Organization (WTO), Economic Research and Statistics Division.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jason H. Grant & Kathryn A. Boys & Chaoping Xie, 2021. "A new president in the White House: implications for Canadian agricultural trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(1), pages 45-58, March.
    2. Thiemo Fetzer & Carlo Schwarz, 2021. "Tariffs and Politics: Evidence from Trump’s Trade Wars," The Economic Journal, Royal Economic Society, vol. 131(636), pages 1717-1741.
    3. Colantone, Italo & Ottaviano, Gianmarco & Stanig, Piero, 2021. "The backlash of globalization," LSE Research Online Documents on Economics 113860, London School of Economics and Political Science, LSE Library.
    4. Michael Funke & Doudou Zhong, 2024. "The political globalization trilemma revisited: An empirical assessment across countries and over time," Economics and Politics, Wiley Blackwell, vol. 36(1), pages 177-201, March.
    5. David Autor & David Dorn & Gordon Hanson & Kaveh Majlesi, 2020. "Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure," American Economic Review, American Economic Association, vol. 110(10), pages 3139-3183, October.
    6. Chad Brown & Paola Conconi & Aksel Erbahar & Lorenzo Trimarchi, 2020. "Trade Protection Along Supply Chains," Working Papers ECARES 2020-52, ULB -- Universite Libre de Bruxelles.
    7. Italo Colantone & Gianmarco I.P. Ottaviano & Piero Stanig, 2021. "The Backlash of Globalization," CESifo Working Paper Series 9289, CESifo.
    8. Bond, Eric W. & Duan, Yuwan & Ji, Ting & Lu, Yi, 2023. "Trade and welfare effects of export tax: Theory and evidence from China's incomplete export VAT rebate," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 542-560.
    9. Dani Rodrik, 2018. "Populism and the economics of globalization," Journal of International Business Policy, Palgrave Macmillan, vol. 1(1), pages 12-33, June.
    10. Furtado, Delia & Kong, Haiyang, 2021. "How Do Low-Skilled Immigrants Adjust to Chinese Import Shocks? Evidence Using English Language Proficiency," IZA Discussion Papers 14152, Institute of Labor Economics (IZA).
    11. Aggeborn, Linuz & Persson, Lovisa, 2017. "Public Finance and Right-Wing Populism," Working Paper Series 1182, Research Institute of Industrial Economics.
    12. Biswajit Banerjee & Risto Herrala, 2024. "Testing the impact of liquidation speed on leverage using Indian data," Working Papers 113, Ashoka University, Department of Economics.
    13. Francisco Costa & Angelo Marcantonio & Rudi Rocha, 2023. "Stop Suffering! Economic Downturns and Pentecostal Upsurge," Journal of the European Economic Association, European Economic Association, vol. 21(1), pages 215-250.
    14. Rodríguez Chatruc, Marisol & Stein, Ernesto H. & Vlaicu, Razvan, 2019. "Trade Attitudes in Latin America: Evidence from a Multi-Country Survey Experiment," IDB Publications (Working Papers) 9603, Inter-American Development Bank.
    15. Christian Dippel & Robert Gold & Stephan Heblich & Rodrigo Pinto, 2017. "Instrumental Variables and Causal Mechanisms: Unpacking the Effect of Trade on Workers and Voters," CESifo Working Paper Series 6816, CESifo.
    16. Braml, Martin & Felbermayr, Gabriel, 2018. "Understanding Free Trade Attitudes: Evidence from Europe," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181591, Verein für Socialpolitik / German Economic Association.
    17. Taiji Furusawa & Hideo Konishi & Duong Lam Anh Tran, 2020. "International Trade and Income Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 122(3), pages 993-1026, July.
    18. Eriksson, Katherine & Alsan, Marcella & Niemesh, Gregory T., 2020. "Understanding the Success of the Know-Nothing Party," CEPR Discussion Papers 15562, C.E.P.R. Discussion Papers.
    19. Haas, Levi & Schenk-Hoppé, Klaus R., 2019. "International Trade: Smarten up to talk the talk," MPRA Paper 99096, University Library of Munich, Germany.
    20. Matthieu Crozet & Laura Hering & Sandra Poncet, 2024. "Is There a Bright Side to the China Syndrome? Rising Export Opportunities and Life Satisfaction in China," PSE-Ecole d'économie de Paris (Postprint) hal-04505684, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:apecpp:v:44:y:2022:i:3:p:1424-1439. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2040-5804 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.