Preferential Trading Arrangements as Strategic Positioning
|Speaker:||Daniel Seidman, University of Newcastle|
|Date:||Friday 1 February 2002|
|Location:||Room 106 Streatam Court|
We analyze a simple bargaining model in which countries form customs unions in order to improve their status quo positions during subsequent multilateral negotiations. This model provides a natural interpretation of preferential trading arrangements as building and stumbling blocks, and predicts a novel role for the damage which customs unions inflict on outsiders. Variants on the model explain the pivotal part played in GATT negotiations by the USâs commitment not to bargain bilaterally, and why open access preferential trading arrangements are so unusual.