What Do Trade Negotiators Negotiate About? Some Evidence from the Uruguay Round
UCSC, Dept. of Economics Working Paper #412
Posted: 25 Sep 1998
Date Written: July 1998
Krugman (1991, 1997) argues that international trade negotiations are based on mercantilist rules. Bhagwati (1988, 1995) highlights how nations are obsessed with reciprocity in their bargaining. Based on studying the trade negotiations process and the results of the Uruguay Round, we provide some answers to the following questions: How did trade negotiators negotiate? What did they negotiate about? We also provide some econometric results based on the Nash bargaining model of Binmore, Rubinstein and Wolinsky (1986) and also partly on the theory of trade talks by Grossman and Helpman (1995). We found that what a country got in concessions relative to what it gave was positively related to its import-to-GNP ratio, but negatively related to its export-to-GNP ratio and also negatively related to its GNP. The last result can be interpreted to provide some support for the "hegemon hypothesis:" to help maintain the world trading system, large countries tend to give more net concessions than small countries.
JEL Classification: F13
Suggested Citation: Suggested Citation