Going alone: the case for relaxed reciprocity in freeing trade

599 Pages·2002·2.11 MB·English

by  Jagdish N. Bhagwati

Going Alone
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Going Alone
The Case for Relaxed
Reciprocity in Freeing
Trade
Edited by Jagdish Bhagwati
The MIT Press
Cambridge, Massachusetts
London, England
(2002MassachusettsInstituteofTechnology
All rights reserved. No part of this book may be reproduced in any form by any
electronic or mechanical means (including photocopying, recording, or information
storageandretrieval)withoutpermissioninwritingfromthepublisher.
This book was set in Palatino on 3B2 by Asco Typesetters, Hong Kong, and was
printedandboundintheUnitedStatesofAmerica.
LibraryofCongressCataloging-in-PublicationData
Goingalone:thecaseforrelaxedreciprocityinfreeingtrade/editedbyJagdish
Bhagwati.
p. cm.
Includesbibliographicalreferencesandindex.
ISBN0-262-02521-3(hc.:alk.paper)
1.Commercialpolicy. 2.Internationaleconomicrelations. 3.Internationaltrade.
I.Bhagwati,JagdishN.,1934–
HF1411.O497 2002
3820.71009—dc21 2002016513
For Robert Baldwin and John Chipman
Generous friends and great international economists
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Contents
Foreword by Christopher DeMuth ix
Preface xi
1 Introduction: The Unilateral Freeing of Trade versus
Reciprocity 1
Jagdish Bhagwati
I Historical Experience 31
2 Leadership by Example?: Britain and the Free Trade Movement
of the Nineteenth Century 33
John A. C. Conybeare
3 Reciprocity and the Origins of U.S. Trade Liberalization 61
Douglas A. Irwin
4 Reciprocity in GATT 1947: From 1942 to the Kennedy
Round 85
Alice Enders
5 Market Access Bargaining in the Uruguay Round: How Tightly
Does Reciprocity Constrain? 111
J. Michael Finger, Ulrich Reincke, and Adriana Castro
II Country Experience 137
6 Australia: A Case Study of Unilateral Trade Liberalization 139
Ross Garnaut
viii Contents
7 Trade Reform in New Zealand: Unilateralism at Work 167
Lewis Evans and Martin Richardson
8 Trade Liberalization in Asia 219
Arvind Panagariya
9 Central Europe during the 1990s: From Unilateralism to
Bilateralism 303
Patrick A. Messerlin
10 The Political Economy of Unilateral Trade Liberalization: The
Case of Chile 337
Sebastian Edwards and Daniel Lederman
11 Unilateral and Reciprocal Trade Reform in Latin America 395
Rachel McCulloch
III Sectoral Experience 443
12 Unilateral International Openness: The Experience of the U.S.
Financial Services Sector 445
Lawrence J. White
13 The Japanese Big Bang as a Unilateral Action 483
Koichi Hamada
14 Internet-Induced Liberalization and Reciprocity: The Case of
Telecommunications 513
Cynthia Beltz Soltys
Index 573
Foreword
The great cause of removing tariffs, quotas, and other impediments
to free trade among nations has proceeded, since the end of World
War II, largely through reciprocal agreements: One nation agrees to
reduce certain of its import restrictions in return for one or more
other nations agreeing to do the same. These are odd sorts of con-
tracts, because each nation’s commitments would serve its own
interests even if undertaken independently of commitments by other
nations. But there is an economic logic and a political logic to recip-
rocaltradeagreementsand,logicaside,theagreementshavebeenan
evident success. The economic logic is that, although reducing my
trade barriers will itself be good for my economy, my gains will be
evengreaterifIcaninduceyoutoreduceyourbarriers.Thepolitical
logic is an application of the theory of interest groups: Government
policymaking tends to be dominated by producer interests, and re-
ciprocal trade negotiations can harness the expansionist interests of
a nation’s producer-exporters to overcoming the protectionist inter-
ests of its producer-importers. And the practical evidence is that the
postwar progress of reciprocal agreements, including the General
Agreement on Tariffs and Trade (GATT) and trade liberalization
underitsauspices,hasbeenaccompaniedbylargegainsintradeand
economic welfare among the participating nations.
Both the logic and the evidence are, however, incomplete. Re-
ciprocal reductions in trade restrictions may be just as beneficial
if pursued sequentially as simultaneously, especially if the simul-
taneous ones require each nation to postpone its reductions until its
diplomats get home from Geneva. The trade agenda generated by
interest-group competition may be less than ideal and will certainly
introduce economic distortions of its own, especially when pursued
at the regional level. And it is easy to find beneficial trade reforms