The Benefits of Trade Liberalisation and Wto Members' Negotiating Positions: Are Imports Really Bad?

Résumé


The traditional notion among trade economists is that governments perceive imports to be detrimental and accept them only in exchange for foreign market access. In contrast, the results of a survey of the national missions at the WTO presented in this article indicate that governments see substantial benefits in domestic trade liberalization. For most governments, these benefits approximately balance the associated costs. Countries appear to complain about being forced to open markets for political rather than economic reasons.

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The Benefits of Trade Liberalisation and Wto Members' Negotiating Positions: Are Imports Really Bad?

1 Introduction

Anyone who has tried to make sense of international trade negotiations eventually concludes that they can only be understood by realizing that they are a game scored according to mercantilist rules, in which an increase in exports - no matter how expensive to produce in terms of other opportunities forgone - is a victory, and an increase in imports - no matter how many resources it releases for other uses - is a defeat.1

It would be difficult to argue against the first of KRUGMAN's conjectures in the quote above, which suggests that governments consider exports to be good. A country gains from access to export markets benefits and from the international specialisation of production, and it may improve its terms of trade due to the increasing global demand for its goods. The conjecture is not only theoretically convincing but corresponds also to empirical observations of trade-policy making. Governments aggressively seek market access in international negotiations and sell international trade agreements at home by emphasising the market access gains.

The first evidence appears also to confirm the idea that the negative aspects of imports dominate in the eyes of governments. Despite eight rounds of multilateral trade negotiations conducted since the Second World War, substantial barriers to trade still remain. Governments repeatedly resist demands in WTO negotiations for further opening of markets, even at the expense of forgoing additional access to foreign markets which could be gained in exchange. When a state makes concessions in WTO negotiations, news of these concessions are usually downplayed in domestic settings.

This article tests the traditional notion that governments believe imports have negative implications. But even if Krugman is right, governments can be supposed to attr...

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