Tariff Bindings and the Dynamic Formation of Preferential Trade Agreements

Lake, James; Nken, Moïse; Yildiz, Halis Murat

doi:10.2139/ssrn.3418636

Cited by 2 publications

(2 citation statements)

References 21 publications

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“…Under this circumstance, FTA creates rents for these producers that would be impossible under the multilateral trade system. Similar theoretical exposition by Aghion et al (2007), Lake (2017) and Lake et al (2020) also follow the exclusion incentive argument. On the other side of theoretical exposition of the PTA and multilateral trade system co‐existence, Bergsten (1996) asserts that regionalism which is a creation of PTA can indeed foster and enrich multilateralism and vice versa.…”

Section: Literature Reviewsupporting

confidence: 75%

Revenue, welfare and trade effects of African Continental Free Trade Agreement (AFCFTA) on Nigerian economy

Oyelami

2021

Journal of Public Affairs

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African Continental Free Trade Agreement (AFCFTA) is gradually becoming a reality and there are needs now more than ever to investigate how African countries will thrive under this new trade regime. Based on this consideration, this study seeks to investigate the revenue, welfare and trade effect of ACFTA on Nigerian economy with the Partial Equilibrium Analysis approach using the World Trade Integrated Solution-Single Market Partial Equilibrium Simulation Tool (SMART) model. SMART is a trade simulation model developed by the World Bank and the UNCTAD using trade flow data and tariff data from Trade Analysis and Information Systems, the World Trade Organization Integrated Database and Consolidated Tariff Schedule.The findings from the study show that AFCFTA is a trade creating Free Trade Agreement in Africa and sectors like petrochemical industries, textile and maritime products are the leading trade creating sector in Nigeria. On the other hand, manufacturing activities in the production of sanitary, papers, electronics and automobiles are trade diverting in Nigeria. Overall, the total trade effect in Nigeria is US$ 145 million with an accompanying welfare effect of US$ 13 million. However, the Nigerian government might experience a loss of revenue of US$104 million as a result of tariff removal. Thus, this study concludes that AFCFTA is a trade creating and expanding policy but it comes at a huge loss of revenue on the part of the Nigerian government and this can be ameliorated with the introduction of the more comprehensive consumption tax system.

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Section: Literature Reviewsupporting

confidence: 75%

Revenue, welfare and trade effects of African Continental Free Trade Agreement (AFCFTA) on Nigerian economy

Oyelami

2021

Journal of Public Affairs

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“…While we employ a static PTA formation model in this paper, a dynamic PTA formation model that uses the Markov perfect equilibrium concept, as in Seidmann (2009), Lake and Yildiz (2016) and Lake et al (2020), can be more appealing from the perspective of deriving the entire equilibrium path of agreements. We leave this for future research.…”

Section: Discussionmentioning

confidence: 99%

The role of non‐discrimination in a world of discriminatory preferential trade agreements

Saggi

Wong²,

Yildiz

2022

Canadian J of Economics

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In a three‐country model of endogenous trade agreements, we study the implications of the most‐favoured‐nation (MFN) clause when countries are free to form discriminatory preferential trade agreements (PTAs). Under current rules of the World Trade Organization (WTO), although non‐member countries face discrimination at the hands of PTA members, they themselves are obligated to abide by MFN and treat PTA members in a non‐discriminatory fashion. The non‐discrimination constraint of MFN reduces the potency of a country's optimal tariffs and therefore its incentive for unilaterally opting out of trade liberalization. Thus, MFN can act as a catalyst for trade liberalization. However, when PTAs take the form of customs unions, the efficiency case for MFN as well as its pro‐liberalization effect is weaker because one country finds itself deliberately excluded by the other two as opposed to staying out voluntarily.

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Tariff Bindings and the Dynamic Formation of Preferential Trade Agreements

Cited by 2 publications

References 21 publications

Revenue, welfare and trade effects of African Continental Free Trade Agreement (AFCFTA) on Nigerian economy

Revenue, welfare and trade effects of African Continental Free Trade Agreement (AFCFTA) on Nigerian economy

The role of non‐discrimination in a world of discriminatory preferential trade agreements

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