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          A "new" Trade Theory of GATT/WTO Negotiations (English)
          Working paper by Ossa, Ralph, 2009, 51 pages
          Categories: Macroeconomic Policy, Trade Policy Analysis and Trade Data Sources, WTO Issues/Multilateral Trading System

          A novel theory of GATT/WTO negotiations that provides new answers to two prominent questions in the trade policy literature: First, what is the purpose of trade negotiations? And second, what is the role played by the fundamental GATT/WTO principles of reciprocity and nondiscrimination? Relative to the standard terms-of-trade theory of GATT/WTO negotiations, my theory makes two main contributions: First, it builds on a "new trade" model rather than the neoclassical trade model and therefore sheds new light on GATT/WTO negotiations between similar countries. Second, it relies on a production relocation externality rather than the terms-of-trade externality and therefore demonstrates that the terms-of-trade externality is not the only trade policy externality, which can be internalized in GATT/WTO negotiations.

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