Publications:

 

"Industrial Targeting in Free Trade Areas with Policy Independence" (with Earl L. Grinols), Canadian Journal of Economics, forthcoming.

"An Enhancement of Modern Free Trade Area Theory" (with Earl L. Grinols), Oxford Economic Papers, Vol. 59, No. 2, pp. 219-225.

“Market Access for Sale” (with Hiau Looi Kee and Marcelo Olarreaga), Journal of Development Economics, Vol. 81, Issue 2, pp. 79-94.

“Economic Integration without Policy Coordination: The Case of Mercosur" (with Werner Baer and Tiago Cavalcanti), Emerging Markets Review, Vol. 3 (2002), No. 3, pp. 269-291.

 

 

Working Papers:

"Rules of Origin and Gains from Trade " (with Earl L. Grinols), working paper #249, Centro Studi Luca d'Agliano. (Submitted)

“Substitution and Protectionism: Latin America’s Trade Policy and Imports from China and India" (with Giovanni Facchini, Marcelo Olarreaga, and Gerald Willmann), Policy Research Working Paper #4188, World Bank. (Submitted)

“The Role of Importers and Exporters in the Determination of the U.S. Tariff Preferences Granted to Latin America", Policy Research Working Paper #3518, World Bank. (Revise and Resubmit)

"Substitutability and Trade Protection in the U.S" (with Gerald Willmann), working paper.

"The Customs Union issue: why do we observe so few of them?" (with Giovanni Facchini and Gerald Willmann), CESifo Working Paper #2426.

“Transition to Market and Stepwise Pareto Improvements" (with Earl L. Grinols and Giovanni Facchini), work in progress.

 

 

 

Abstracts:

“Industrial Targeting in Free Trade Areas with Policy Independence"
We investigate the limits of a mechanism whereby nations forming a free trade area may simultaneously satisfy internal industrialization targets. We find the necessary and sufficient conditions that guarantee that for arbitrary targets the mechanism is efficient for member countries individually, even if other free trade area members do not implement the efficient policy. In the special case when the objective is conservative, meaning designed to protect the level of industrialization achieved by the target industry prior to the free trade area's formation, member countries are guaranteed gains from the efficient policy and participation in the free trade area. The analysis covers cases with transportation costs and explains why minimalist rules of origin support efficiency and policy independence.
“Substitution and Protectionism: Latin America’s Trade Policy and Imports from China and India"
This paper examines the trade policy response of Latin American governments to the rapid growth of China and India in world markets. To explain higher protection in sectors where a large share is imported from these countries, we extend the `protection for sale' model to allow for different degrees of substitutability between domestically produced and imported varieties. The extension suggests that higher levels of protection towards Chinese goods can be explained by high substitutability between domestically produced goods and Chinese goods, whereas lower levels of protection towards goods imported from India can be explained by low substitutability with domestically produced goods. The data supports the extension to the `protection for sale' model, which performs better than the original specification in terms of explaining Latin America's structure of protection.
“Existence of Equilibrium in Welfare-Enhancing Free Trade Areas"
Free trade areas generally involve unharmonized tariffs that imply goods prices vary between member countries and they entail potentially complicated rules of origin that make standard analyses inapplicable. Nevertheless, it is reasonable to believe that any world trade equilibrium can be replaced by an alternative welfare-enhancing equilibrium involving free trade areas and appropriate rules of origin. This paper proves that a free trade area equilibrium exists involving \textit{within-FTA} transfers only that is at least as satisfactory for every consumer worldwide as the original world trade allocation and identifies a minimal condition that the rules of origin must satisfy to guarantee welfare gains. Interestingly, many commonly used rules of origin in practice fail this condition.
“The Role of Importers and Exporters in the Determination of the U.S. Tariff Preferences Granted to Latin America"
This paper investigates the role played by domestic importers and foreign exporters in improving preferential access to the domestic market. To this end, the framework used in this paper extends the protection for sale analysis to
explicitly model the role of domestic importers and foreign exporters in the determination of preferential trade treatment.
The predictions of the model are tested using data on preferential trade between the United States and Latin American countries. The results suggest that Latin American exporters and US importers' lobbying efforts have a significant and important role in determining the extent of preferential access granted by the United States. More interestingly, these findings also show that U.S. importers capture a very substantial share of the rents generated by tariff preferences.These results therefore shed a pessimistic view on preferential trade schemes as a reliable source of gains for developing countries.
"Strategic Delegation and the Formation of Preferential Agreements"
While the number of preferential trade agreements has greatly increased over the past two decades, most existing bilateral arrangements take the form of free trade areas, and less than ten percent can be considered fully fledged customs unions. This paper develops a political economy of trade model under imperfect competition to provide a positive explanation for the prevalence of free trade areas. In our three country model, a representative from each prospective member country is elected to determine the tariffs to be applied on imported goods. Under a customs union, the necessity to coordinate tariffs leads voters to strategically delegate power to more protectionist representatives. Contrary to most of the existing literature, strategic delegation may then lead to the result that free trade areas raise welfare relative to customs unions. Moreover, the model also indicates that free trade areas are more likely to be politically viable than customs unions.