Mars or Mercury redux: The geopolitics of bilateral trade agreements

Eichengreen, Barry; Mehl, Arnaud; Chițu, Livia

doi:10.1111/twec.13018

Cited by 11 publications

(6 citation statements)

References 40 publications

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“…First, its return to CPTPP is likely to facilitate a reduction in US dependence on Chinese intermediate products and a grater diversification in its supply chains. 9 Second, after the UK becomes a member of CPTPP, four member countries -Australia, New Zealand, Japan and the UK -have defense pacts with the US, which might provide a political incentive for the US to rejoin the trade pact amid escalating conflicts with China (Hinz, 2017;Eichengreen et al, 2021). Both issues are beyond the scope of this paper and the reader is referred to the literature for further details.…”

Section: Discussionmentioning

confidence: 99%

Should the United States rejoin the Trans-Pacific trade deal?

Itakura

Lee

2023

Int Econ Econ Policy

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Before the Trans-Pacific Partnership (TPP) entered into force, the United States withdrew from the trade accord. Eleven other TPP signatories decided to revive the agreement, which led to the implementation of the Comprehensive and Progressive Agreement for TPP (CPTPP). The objectives of this paper are to estimate economic welfare effects under alternative scenarios of TPP / CPTPP, to evaluate the extent of losses to the US from its withdrawal from TPP and expected gains from rejoining the Trans-Pacific trade accord, and to examine whether the US economy would have to undergo extensive sectoral adjustments from its participation. We employ a dynamic computable general equilibrium (CGE) model to examine these issues. The results suggest that the US loses an opportunity to gain 0.4 percent in its economic welfare by withdrawing from TPP, but it would be able to recover most of its projected welfare gains by reengaging with CPTPP. Since sectoral output adjustments in the US are small, its adjustment costs from participation in CPTPP would be limited. In addition, there exist political incentives for the US to become a member of this trade accord.

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Section: Discussionmentioning

confidence: 99%

Should the United States rejoin the Trans-Pacific trade deal?

Itakura

Lee

2023

Int Econ Econ Policy

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“…First, its return to CPTPP is likely to facilitate a reduction in US dependence on Chinese intermediate products and a greater diversi cation in its supply chains (Laget et al, 2020). Second, after the UK becomes a member of CPTPP, four member countries -Australia, New Zealand, Japan and the UK -will have defense pacts with the US, which might provide a political incentive for the US to rejoin the trade pact amid escalating tensions with China (Hinz, 2017;Eichengreen et al, 2021). [1] Both issues are beyond the scope of this paper and the reader is referred to the literature for further details.…”

Section: Discussionmentioning

confidence: 99%

“…Hinz (2017) suggests that geopolitical considerations play a signi cant role in the choice of partner countries and the depth of economic integration. Eichengreen et al (2021) indicate that both economic variables and geopolitical factors are important for bilateral trade accords. Notably, defense treaties signi cantly increase the probability of implementing a bilateral trade agreement.…”

Section: Introductionmentioning

confidence: 99%

Should the United States Rejoin the Trans-Pacific Trade Deal?

Itakura

Lee

2021

Preprint

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Before the Trans-Pacific Partnership (TPP) entered into force, the United States withdrew from the trade accord. Eleven other TPP signatories decided to revive the agreement, which led to the implementation of the Comprehensive and Progressive Agreement for TPP (CPTPP). The objectives of this paper are to estimate economic welfare effects under alternative scenarios of TPP/CPTPP, to evaluate the extent of losses to the US from its withdrawal from TPP and expected gains from rejoining the Trans-Pacific trade accord, and to examine whether the US economy would have to undergo extensive sectoral adjustments from its participation. We employ a dynamic computable general equilibrium (CGE) model to examine these issues. The results suggest that the US loses an opportunity to gain 0.4 percent in its economic welfare by withdrawing from TPP, but it would be able to recover most of its projected welfare gains by reengaging with CPTPP. Since sectoral output adjustments in the US are small, its adjustment costs from participation in CPTPP would be limited. In addition, there exist political incentives for the US to become a member of this trade accord.

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“…Geopolitics has long been recognized as a driver of PTAs. For example, Eichengreen, Mehl, and Chitu (2021) find, using the pre-World War 1 period as a reference, that defense pacts boost the probability of a bilateral trade agreement by as much as 20%. Other scholars have found a link between trade flows and military alliances (Long and Leeds, 2006).…”

Section: Pta Trendsmentioning

confidence: 99%

Preferential Trade Agreements, Geopolitics, and the Fragmentation of World Trade

Dadush

Prost

2023

World Trade Review

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Failure to reestablish an effective World Trade Organization (WTO) dispute settlement procedure, stop the erosion of multilateral rules and end the China–US trade war causes capitals to rethink trade policy. One response is to redouble efforts to strike trade agreements with major trading partners. Already countries accounting for about 78% of world Gross Domestic Product (GDP) are members of mega-regional agreements, and based on our computations, preferential trade agreements (PTAs) will soon cover about two-thirds of world trade. Can PTAs replace a fading WTO or mitigate its effects? Amid deepening geopolitical rifts, how will trade relations among China, the EU, and the US, each a hegemon in their respective regions, evolve, and what will be the impact on smaller economies? In short, how will a trading system based increasingly on PTAs and weak multilateral rules look, and how will nations adapt? Absent reforms, the trading system is likely to fragment progressively into regional blocks organized around the hegemons. Trade within the regional blocks, mainly conducted under a mega-regional agreement, will likely remain quite open and predictable, but without strict multilateral rules and where PTAs are absent (as they are among the hegemons), interregional trade relations will become increasingly uncertain and unstable.

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Mars or Mercury redux: The geopolitics of bilateral trade agreements

Cited by 11 publications

References 40 publications

Should the United States rejoin the Trans-Pacific trade deal?

Should the United States rejoin the Trans-Pacific trade deal?

Should the United States Rejoin the Trans-Pacific Trade Deal?

Preferential Trade Agreements, Geopolitics, and the Fragmentation of World Trade

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