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The "New" Economics of Trade Agreements: From Trade Liberalization to Regulatory Convergence?

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  • Gene M. Grossman
  • Phillip McCalman
  • Robert W. Staiger

Abstract

What incentives do governments have to negotiate "new trade agreements," i.e., agreements that constrain not only governments' choices of tariffs, but also their domestic regulatory policies? We focus on horizontal product standards, i.e., those that impose requirements along a horizontal dimension of product differentiation. We introduce differences in ideal products across countries and consider cases in which product choices do not and do confer externalities on other national consumers. In addition to characterizing the features of the optimal new trade agreement in each environment, we ask whether detailed negotiations about regulatory rules are needed for global efficiency or whether an "old trade agreement" augmented by some "policed decentralization" of regulatory procedures can achieve the same outcomes.

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  • Gene M. Grossman & Phillip McCalman & Robert W. Staiger, 2019. "The "New" Economics of Trade Agreements: From Trade Liberalization to Regulatory Convergence?," NBER Working Papers 26132, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:26132
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    6. Afontsev, S., 2024. "Theoretical dimensions of economic sovereignty," Journal of the New Economic Association, New Economic Association, vol. 64(3), pages 218-224.
    7. Jeffrey H. Bergstrand & Stephen R. Cray & Antoine Gervais, 2023. "Increasing Marginal Costs, Firm Heterogeneity,and the Gains from "Deep" International Trade Agreements," Cahiers de recherche 23-01, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
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    9. Bergstrand, Jeffrey H. & Cray, Stephen R. & Gervais, Antoine, 2023. "Increasing marginal costs, firm heterogeneity, and the gains from “deep” international trade agreements," Journal of International Economics, Elsevier, vol. 144(C).
    10. Schmidt, Julia & Steingress, Walter, 2022. "No double standards: Quantifying the impact of standard harmonization on trade," Journal of International Economics, Elsevier, vol. 137(C).
    11. Geng, Difei & Saggi, Kamal, 2022. "Tariff barriers and the protection of intellectual property in the global economy," European Economic Review, Elsevier, vol. 144(C).
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    13. Shingal, Anirudh & Ehrich, Malte, 2024. "The EU’s pesticides MRLs harmonization: effect on trade, prices and quality," Food Policy, Elsevier, vol. 125(C).
    14. Naoto Jinji & Yukiko Sawada & Xingyuan Zhang & Shoji Haruna, 2024. "Gravity for cross‐border licensing and the impact of deep trade agreements: Theory and evidence," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(3), pages 836-869, August.
    15. Ariel Weinberger & Luca Macedoni, 2023. "International Spillovers of Quality Regulations," Working Papers 2023-10, The George Washington University, Institute for International Economic Policy.
    16. Katja Pietrzyck & Nora Berke & Vanessa Wendel & Julia Steinhoff-Wagner & Sebastian Jarzębowski & Brigitte Petersen, 2021. "Understanding the Importance of International Quality Standards Regarding Global Trade in Food and Agricultural Products: Analysis of the German Media," Agriculture, MDPI, vol. 11(4), pages 1-20, April.
    17. Bård Harstad, 2022. "Trade, Trees, and Contingent Trade Agreements," CESifo Working Paper Series 9596, CESifo.
    18. Djolaud, Guy, 2022. "Import Penetration of Low Quality Products : Markups Implications," MPRA Paper 114611, University Library of Munich, Germany.
    19. Luca Macedoni, 2022. "Asymmetric information, quality, and regulations," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1180-1198, September.
    20. Naoto JINJI & Yukiko SAWADA & Xingyuan ZHANG & Shoji HARUNA, 2021. "Gravity for Cross-border Licensing and the Impact of Deep Trade Agreements: Theory and Evidence," Discussion papers e-20-008, Graduate School of Economics , Kyoto University.
    21. Luca Macedoni & Ariel Weinberger, 2021. "Quality Misallocation, Trade, and Regulations," CESifo Working Paper Series 9041, CESifo.
    22. Beguin, Malo, 2021. "Harmonization, Mutual Recognition or National Treatment: a Melitz approach," LIDAM Discussion Papers LFIN 2021010, Université catholique de Louvain, Louvain Finance (LFIN).
    23. Yuan Mei, 2024. "Regulatory Protection And The Role Of International Cooperation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(2), pages 817-850, May.

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    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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