From the collective choice perspective, this paper examines how different trade regimes have differing implications for two enemy countries' arming decisions in a three-country world with a neutral ...third-party state. We compare the two adversaries' aggregate arming (i.e., overall conflict intensity) and show that it is in
ascending
order for the following regimes: (i) a free trade agreement (FTA) between the adversaries, leaving the third-party state as a non-member, (ii) worldwide free trade in the presence of the interstate conflict, (iii) trade wars with Nash tariffs, and (iv) an FTA between the third country and one adversary, excluding the other adversary from the trade bloc. These results have policy implications for interstate conflicts. First, “dancing between two enemies” with an FTA results in lower aggregate arming than under worldwide free trade. Second, the world is “more dangerous” in tariff wars than under free trade. Third, an FTA between one adversary and the third party while keeping the other adversary as an outsider is
conflict-aggravating
since aggregate arming is the highest compared to all other trade regimes. We also analyze aggregate arming under a customs union (CU) and discuss differences/similarities in implications between a CU and an FTA for interstate conflicts.
The Schengen Agreement is an important milestone in the European integration process. The purpose is to facilitate the flow of goods, services, and persons across intra‐European borders. How ...successful is it in achieving this goal? We apply an econometric gravity analysis to bilateral trade. Unlike earlier analysis, we acknowledge that Schengen treats different country pairs differently, depending on their relative geographical location. Moreover, we find it crucial to carefully control for other elements of European integration such as membership in the customs union, the single market or the currency union, and to factor in countries' trade with themselves. Schengen has boosted trade by about 2.81 per cent on average, on top of the EU's trade effects (equivalent to a drop in tariffs between 0.46 and 1.02 percentage points). Trade creation effects for services are stronger than for goods, but estimates feature larger parameter uncertainty. Peripheral countries benefit more than central ones. Other aspects of EU integration matter much more for trade than Schengen.
This study investigates the effect of regional trade agreements (RTAs)—including preferential and free trade agreements, customs unions, and common markets—on bilateral tourism flows. We explore ...these effects using a panel gravity data set of 163 destination countries, 171 source countries, and 13,589 country-pairs from 1995 to 2015. This is the first large cross-country study to undertake such an integrated analysis using the gravity framework. Results show that all types of RTAs have a positive and significant effect on bilateral tourism flows. The overall indicator of RTAs that captures the combined effect of all types of RTAs on bilateral tourism flows is also positive and significant, on average, as well as when different regions are separately evaluated. These findings underscore the importance of strong economic integration in fostering international tourism flows. Policies aimed at improving a country’s economic integration with other countries can help promote international tourism flows.
Mercosur has undergone numerous transformations, from a customs union to an organization promoting development and consulting civil society. Recently, there has been a backlash against such ...‘politicization’, and an attempt to return Mercosur to its origins. At each of these phases, Mercosur was plagued by questions about its legitimacy and purpose, and its leaders reached out to different types of actors to legitimize it. This article argues that each phase of Mercosur's evolution represented the ascendancy of a constellation of social forces, which sought to shift the governance of particular issues beyond the national scope, to secure their interests. In this context, the different legitimation processes and changing actors involved in them represent different balances of forces within Mercosur. The article traces the evolution of Mercosur and its legitimation processes, identifying the social struggles behind them, and the different conceptions of legitimacy constructed and contested as part of this process.
In a three‐country model of endogenous trade agreements, we study the implications of the most‐favoured‐nation (MFN) clause when countries are free to form discriminatory preferential trade ...agreements (PTAs). Under current rules of the World Trade Organization (WTO), although non‐member countries face discrimination at the hands of PTA members, they themselves are obligated to abide by MFN and treat PTA members in a non‐discriminatory fashion. The non‐discrimination constraint of MFN reduces the potency of a country's optimal tariffs and therefore its incentive for unilaterally opting out of trade liberalization. Thus, MFN can act as a catalyst for trade liberalization. However, when PTAs take the form of customs unions, the efficiency case for MFN as well as its pro‐liberalization effect is weaker because one country finds itself deliberately excluded by the other two as opposed to staying out voluntarily.
Résumé
Le rôle de la non‐discrimination dans un monde d'accords commerciaux préférentiels discriminatoires. Nous étudions, dans un modèle à trois états d'accords commerciaux endogènes, les conséquences d'une clause de la nation la plus favorisée (NPF) dans un scénario où les pays sont libres de conclure des accords commerciaux préférentiels (ACP) discriminatoires. En vertu des règles en vigueur de l'Organisation mondiale du commerce (OMC), même si les états non membres subissent de la discrimination de la part des membres d'ACP, ils doivent tout de même se conformer à la clause de la NPF et traiter les membres d'ACP sans discrimination. Les obligations de non‐discrimination de la NPF réduisent le poids des tarifs optimal d'un état et, du coup, sa motivation à se désister unilatéralement de la libéralisation du commerce. Ainsi, la clause de NPF peut avoir un effet catalyseur sur la libéralisation du commerce. Or, lorsque les ACP se présentent sous la forme d'unions douanières, le poids de l'efficacité d'une clause de NPF et ses effets favorisant la libéralisation sont affaiblis du fait qu'un état est délibérément exclu par les deux autres, plutôt que de pouvoir se désister volontairement.
The aim of the study was to analyse the effect of the Southern Africa Development Community agreement (SADC) (excluding Southern African Customs Union (SACU)) on South African wood and the wood ...products trade, using the gravity model. The study used panel data from 1996 to 2016. The results showed that the SADC (excluding SACU) agreement positively impacts the exports of wood and wood products. However, on imports, there is insufficient evidence to indicate that the SADC (excluding SACU) agreement has a statistically significant positive effect on South African wood and wood products. The SADC (excluding SACU) is an important market for South African wood exports and wood products exports. Therefore, maintaining or improving trade facilitation measures could further benefit South Africa's exports of wood and wood products.
We examine the effect of regionalism on unilateral trade liberalization using industry-level data on applied most-favored nation (MFN) tariffs and bilateral preferences for ten Latin American ...countries from 1990 to 2001. We find that preferential tariff reduction in a given sector leads to a reduction in the external (MFN) tariff in that sector. External liberalization is greater if preferences are granted to important suppliers. However, these "complementarity effects" of preferential liberalization on external liberalization do not arise in customs unions. Overall, our results suggest that concerns about a negative effect of preferential liberalization on external trade liberalization are unfounded.
International economic integrations, especially after the end of World War II, result from the long-term goals of establishing political unity based on countries' orientation towards their common ...economic interests. Customs unions, in which states abolish tariffs among themselves and apply common tariffs to third countries, are the next advanced stage of international integration after free trade zones. While customs unions eliminate tariffs and related taxes in trade within their jurisdiction, they also establish a common external tariff. This entails some asymmetrical disadvantages for the countries within the Union. A new step by Türkiye in its efforts to integrate with the West was its application to join the EEC in 1959. The Customs Union, defined by the Ankara Agreement signed in 1963, came into effect in 1996 as a result of the agreement made at the meeting of the Association Council of 6 March 1995 adopted "Customs Union Decision". The aim of this study is to examine the bilateral trade impact of the Customs Union between Türkiye and the EU. H1: Which fields should be included in the customs union between Türkiye and the EU? H2: How will the inclusion of trade in digital goods and services in the Customs Union affect EU-Türkiye trade? The results from the analysis covering the years of 1996-2021 showed that the Customs Union has had a positive but limited effect for the trade between EU-Türkiye. The customs union needs to be updated taking into account public procurement, agriculture and digital services.
In view of the deferred start of negotiations for the modernization of the customs union between the EU and Turkey (CU-EUT), we looked back and analysed the ex post trade consequences of the CU-EUT. ...Employing up-to-date econometric best practices for regional integration agreements, we quantified both the total and the heterogeneous trade effects of the CU-EUT. In contrast with most previous studies, our results indicate that the CU-EUT made a significantly positive, large and robust impact, implying there was an additional increase in EU-Turkey trade in manufacturing by 55–65 per cent compared with that during the previously active Ankara Agreement. We also provide evidence that the CU-EUT significantly increased Turkey's trade with non-member countries of the CU-EUT. Additionally, a substantial heterogeneity in the CU-EUT effect was found across different industries as well as for each of its member countries and the direction of trade. We linked the heterogeneity of up to 911 coefficient estimates to the differences in initial trade costs and show that it cannot be ascribed to reductions in bilateral tariff rates.
This study explores the relevance of the core–periphery relationship in the Southern African Customs Union (SACU), a union comprising five highly unequal economies. In the analysis, the study employs ...five key indicators: economic size, trade logistics and facilitation, regional integration, and intra-SACU trade, to assess the main aspects underlying the core–periphery relationship in the union. The findings of this study point to dominance-dependency behavior within the union, where South Africa is the dominant core while Botswana, Lesotho, Namibia, and eSwatini are the dependent periphery. Based on the findings, the recommendations are that SACU countries should, among other strategies, identify ways of promoting high-value-added cross-border value chains across the union members. Also, the Botswana, Lesotho, Namibia, and eSwatini peripheries could improve their infrastructure and productive capacity if their objective is to create an export base in some of the products currently supplied by South Africa.
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