Working Paper: NBER ID: w29578
Authors: Robert W. Staiger
Abstract: The design of a trade agreement should reflect its purpose. Does digital trade change the purpose of a trade agreement? To explore this question, I first describe the definitional and classification issues associated with digital trade, and for modeling purposes I adopt a simple taxonomy of the ways in which digital trade can arise and the policies that can be used to restrict such trade. I then review what the theoretical literature on the economics of trade agreements has to say about the purpose of a trade agreement in a pre-digital model world economy, and how this purpose can be seen to be reflected in the broad design features of both GATT and GATS, the WTO agreements that govern international trade in goods and services respectively. Finally, I introduce digital trade into the model world economy and revisit the purpose of a trade agreement. From this perspective I consider whether the rise of digital trade warrants changes in the design of the WTO.
Keywords: No keywords provided
JEL Codes: F02; F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| digital trade (F19) | new forms of trade protection (F13) |
| new forms of trade protection (F13) | changes in trade agreements (F13) |
| digital trade (F19) | complexity of trade agreements (F13) |
| non-pecuniary externalities cross borders (D62) | complexity of trade agreements (F13) |
| digital trade does not fundamentally alter existing framework (F12) | adaptations in trade agreements (F13) |
| local externalities (D62) | fundamental purpose of trade agreements remains unchanged (F13) |