Abstract
This paper is concerned with the sustainability of free‐trade agreements (FTA). FTA sustainability is influenced by governments’ valuations of political contributions, discount factors, the lobbying position of the specific‐interest groups in the intra‐industry trade sectors, and the sectoral coverage of the FTA. I find that (i) under certain conditions, the FTA under protectionist lobbying could be more sustainable than the FTA under no political pressure; (ii) the lobby‐supported FTA is more sustainable than the lobby‐opposed FTA and the FTA under no political pressure; and (iii) multisector trade enhances FTA sustainability. JEL Classification: F12, F13, F15.
| Original language | English |
|---|---|
| Pages (from-to) | 1061-1083 |
| Number of pages | 23 |
| Journal | Canadian Journal of Economics |
| Volume | 37 |
| Issue number | 4 |
| Early online date | 18 Oct 2004 |
| DOIs | |
| Publication status | Published - Nov 2004 |
| Externally published | Yes |
Funding
The paper benefited from presentations at the RIEB International Conference (Kobe), the 8th World Congress of the Econometric Society (Seattle), and the European Economic Association Meeting (Bolzano). Financial support from Hong Kong's Research Grant Council (DAG03/04.BM28) is gratefully acknowledged.
Keywords
- lobbying
- special-interest groups
- political economy
- free-trade agreements
- multisector trade
- defection incentives
- sustainability
- GATT Article XXIV