Issue Linking in Trade Negotiations: Ricardo Revisited or No Pain No Gain
There has been much discussion about what issues should be included in international “trade” negotiations. Different countries, firms, and activist groups have quite different views regarding which items should (or should not) be negotiated together. Proposals run the gamut from no linking to linkin...
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Published in | Review of international economics Vol. 13; no. 2; pp. 185 - 204 |
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Main Authors | , , |
Format | Journal Article |
Language | English |
Published |
Oxford, UK
Blackwell Publishing Ltd
01.05.2005
Wiley Blackwell |
Series | Review of International Economics |
Subjects | |
Online Access | Get full text |
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Summary: | There has been much discussion about what issues should be included in international “trade” negotiations. Different countries, firms, and activist groups have quite different views regarding which items should (or should not) be negotiated together. Proposals run the gamut from no linking to linking trade with investment, the environment, labor, and human rights codes. This paper provides a formal framework for analyzing this question. It employs a two‐country, two‐issue bargaining model and contrasts outcomes when issues are negotiated separately and when they are linked in some form. A key concept is “comparative interest,” analogous to Ricardian comparative advantage. We provide general results and note, in particular, where a country can benefit by agreeing to include an agenda item for which, when viewed by itself, the country does not receive a positive payoff. We also provide an application of our analysis to negotiations on trade liberalization and environmental protection. |
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Bibliography: | We thank seminar participants at the NBER Summer Institute, University of Colorado, Michigan State University, and University of Toronto, as well as an anonymous referee of this journal, for helpful comments and suggestions. istex:E6688A9B9ED9EE745266E41A2A6BA197F48C2A2B ark:/67375/WNG-P5SDB7JS-H ArticleID:ROIE498 ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23 |
ISSN: | 0965-7576 1467-9396 |
DOI: | 10.1111/j.1467-9396.2005.00498.x |