Should Credit Be Given for Autonomous Liberalization in Multilateral Trade Negotiations?

33 Pages Posted: 20 Apr 2016

See all articles by Aaditya Mattoo

Aaditya Mattoo

World Bank - Development Research Group (DECRG)

Marcelo Olarreaga

University of Geneva; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2000

Abstract

As each new round of multilateral trade negotiations approaches, there is a demand for a negotiating rule that would give credit for previous unilateral liberalization. The feasibility and desirability of such a rule depend on when it is instituted.

As each new round of multilateral trade negotiations approaches, there is a demand for a negotiating rule that would give credit for autonomous (unilateral) liberalization. Mattoo and Olarreaga show that the feasibility and desirability of such a rule depend on when it is instituted.

A credit rule established at the beginning of a round of negotiations has a primarily distributional effect, favoring those who have already undertaken liberalization. Implementing such a rule would depend on the generosity of those who have not liberalized.

The authors propose instead establishing a credit rule at the end of a round of negotiations, which creates an ex ante assurance that any unilateral liberalization will receive credit in the next round. Such a rule would help induce or enhance liberalization in some countries between negotiating rounds by reducing the gains from retaining protection as negotiating currency.

More strikingly, it could also lead to deeper levels of multilateral liberalization and induce other countries to go further than they would in the absence of a rule.

Most important, such an ex ante rule would not rely on altruism to be generally acceptable.

This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to improve trade policy in goods and services. The authors may be contacted at amattoo@worldbank.org or molarreaga@worldbank.org.

Suggested Citation

Mattoo, Aaditya and Olarreaga, Marcelo, Should Credit Be Given for Autonomous Liberalization in Multilateral Trade Negotiations? (June 2000). Available at SSRN: https://ssrn.com/abstract=630744

Aaditya Mattoo (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

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Marcelo Olarreaga

University of Geneva ( email )

40 Boulevard du Pont-d'Arve
Genève, CH - 1205
Switzerland

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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