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Trade negotiations, domestic policies, and the Most Favored Nation clause

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  • Gal Hochman

Abstract

. This paper illustrates how restricting trade instruments to non‐discrimination links trade agreements to non‐trade agreements and, under certain conditions, helps governments further lower tariffs and/or domestic standards (policies). These conditions are: (i) governments' objective functions are sufficiently concave with respect to domestic standards (policies); (ii) domestic standards are sufficiently valued; and (iii) policies are strategic complements. These can then be used as a rationale for restricting safeguard measures to non‐discrimination. Ce texte montre comment le fait de restreindre les instruments de politique commerciale à la seule poursuite de liens commerciaux libres de discrimination relie accords commerciaux et non‐commerciaux, et, à certaines conditions, aide les gouvernements à réduire encore davantage les tarifs douaniers et/ou les normes (politiques) nationales. Ces conditions sont que: (i) les fonctions objectives soient suffisamment concaves par rapport aux normes (politiques) nationales; (ii) les normes nationales soient suffisamment valorisées; et (iii) les politiques soient des compléments stratégiques. Ces arguments fournissent le rationale pour limiter les mesures de protection à la seule non‐discrimination.

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  • Gal Hochman, 2008. "Trade negotiations, domestic policies, and the Most Favored Nation clause," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(3), pages 781-795, August.
    • Handle: RePEc:wly:canjec:v:41:y:2008:i:3:p:781-795
    DOI: 10.1111/j.1540-5982.2008.00485.x
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    Cited by:

    1. Hartigan, James C., 2018. "Punching out of one's weight class? Cross agreement retaliation in the WTO," International Review of Economics & Finance, Elsevier, vol. 54(C), pages 274-288.

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    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment

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