Free-Trade Areas and Special Protection
43 Pages Posted: 5 Dec 2013
Date Written: October 2013
This paper investigates the impact of regional free-trade-area (FTA) agreements on the ability of countries to multilaterally cooperate within an economic environment characterized by trade-flow volatility. We show that the parallel formation of different FTAs leads to a gradual but permanent easing of multilateral trade tensions. In particular, we demonstrate that the emergence of the FTAs will be accompanied by a decline in global special-protection activity, such as safeguard or anti-dumping initiations, but will have less significant implications for most-favored-nation tariffs, or "normal" trade protection.
JEL Classification: F13, F15
Suggested Citation: Suggested Citation