Working Paper: CEPR ID: DP1611
Authors: Richard E. Baldwin; Joseph F. Francois
Abstract: This study provides a quantitative assessment of the implications of preferential trade liberalization by the North Atlantic economies. Emphasis is placed on the pattern of production and trade in North America and Western Europe, the pattern of import protection, and the likely trade and income effects of trade liberalization. The potential benefits of preferential trade liberalization are also compared with the potential benefits of post-Uruguay Round most-favoured nation-based reductions in trade barriers. The numerical assessment highlights the impact both on the North Atlantic economies themselves, and on their important regional trading partners.
Keywords: free trade agreements; preferential trade; regionalism; TAFTA; transatlantic trade
JEL Codes: F13; F47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| narrow preferential agreement that eliminates tariffs on industrial goods (F13) | very little return for effort (I26) |
| narrow preferential agreement that eliminates tariffs on industrial goods (F13) | slight increase in income for North America and EFTA (F29) |
| narrow preferential agreement that eliminates tariffs on industrial goods (F13) | no significant effect on the EU (F55) |
| deeper agreement includes elimination of agricultural protection and contingent protection (F13) | modest income and wage gains for North Atlantic economies (O51) |
| deeper agreement includes elimination of agricultural protection and contingent protection (F13) | increase in real income (E25) |
| potential economic benefits from preferential liberalization (F69) | gains from multilateral liberalization (F69) |