Going to the Next Level: The Political-Economy of Bilateralism - A Case Study of the Canada-Costa Rica Free Trade Agreement
37 Pages Posted: 7 Jan 2008
Given the proliferation and intensification of regional trade agreements (RTAs) and bilateral free trade agreements (FTAs) in the global economy, it is worthwhile to examine some of the key approaches for understanding why states cooperate through trade agreements. Evidence suggests that traditional economic explanations based primarily on welfare gains hold little in the way of explanatory power, especially for understanding larger country involvement in trade agreements with smaller countries. One theory suggests that side-payments to the larger country help explain why larger countries may be involved in such arrangements. Building upon political-economic explanations for economic strategies, this paper presents a three-level model that emphasizes the importance of interests and conditions at the multilateral and regional levels for influencing bilateral initiatives. Through an analysis of the Canada-Costa Rica Free Trade Agreement, this paper highlights the interconnected nature of state interests at multiple levels, as well as some of the shortcomings of purely economic explanations for understanding why states enter trade agreements.
Keywords: political-economy of bilateralism, Canada-Costa Rica Free Trade Agreement, multi-level interests
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