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Halis YILDIZ (Ryerson University) “Tariff Bindings and the Dynamic Formation of Preferential Trade Agreements”

March 11, 12:15 pm - 1:30 pm

Time: 12:15pm – 13:30 pm
Date: 11th of March 2019
Place: Room 3001

Halis YILDIZ (Ryerson University) “Tariff Bindings and the Dynamic Formation of Preferential Trade Agreements”

AbstractWe show that multilateral tariff binding liberalization substantially impacts the nature and extent of Preferential Trade Agreement (PTA) formation. First, it shapes the nature of forces constraining expansion of Free Trade Agreements (FTAs). The constraining force is a free riding incentive of FTA non-members under relatively high bindings but an exclusion incentive of FTA members under relatively low bindings. Second, multilateral tariff binding liberalization shapes the role played by PTAs in the attainment of global free trade. Initially, tariff binding liberalization leads to Custom Union (CU) formation in equilibrium but in a way that undermines the pursuit of global free trade. However, further tariff binding liberalization leads to FTA formation in equilibrium and in a way that facilitates the attainment of global free trade. Our theoretical analysis also has implications regarding recent empirical discussions over the relative merits of FTAs versus CUs.

Details

Date:
March 11
Time:
12:15 pm - 1:30 pm
Event Categories:
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Organizers

Edouard CHALLE
Julien PRAT