@article{Durand-Morat:103835,
      recid = {103835},
      author = {Durand-Morat, Alvaro and Wailes, Eric J. and Sharp, Misti},
      title = {Sensitive Product Treatment in Agricultural Trade  Negotiations},
      address = {2011},
      number = {321-2016-11053},
      series = {Poster},
      pages = {2},
      year = {2011},
      abstract = {The fact that trade, and especially agricultural trade,  remains far from free is puzzling, since the superiority of  free trade receives overwhelming support among economists  (Gawande and
Krishna, 2003; Rodrik, 1994). International  trade scholars have devoted significant resources to  forecasting the impact of trade policy reforms (for a  survey of these studies see Congressional Budget Office,  2005), and their findings are relevant inputs for officials  negotiating a trade agreement as well as for politicians in  charge of ratifying it. The perceived gains and losses  attached to different outcomes have been
identified as a  significant factor shifting the outcome of a trade  agreement negotiation (McMillan, 1990). Less well-known are  the factors that would impact the result of a negotiation  round involving agriculture. While political scientists  have devoted significant resources and developed numerous  theories to explain the pattern of bargaining outcomes, the  number of empirical assessments remains limited. Among the  factors to blame for the low number of empirical  evaluations is the scarcity of information regarding  negotiation strategies and outcomes (Odell, 2002). The lack  of research in this area is puzzling, since countries  negotiating regionally and multilaterally have many times  struggled to satisfactorily conclude negotiations due to a  lack of consensus on agriculture. The potential gains that  a reduction in agricultural protection worldwide could  generate, and the
limited knowledge on the ways negotiation  outcomes can be affected, are the main motivations for this  study. As stated by Hoekman and Anderson (1999) in  reference to reaching an agreement on agriculture in the  current WTO Doha Round of negotiations, “The potential  gains from liberalization are large”, but “Getting there is  another matter” (p. 175). This study focuses on U.S. trade  negotiations with Western Hemisphere countries, with  particular attention to sensitive agricultural products,  about which the most heated bargaining occurs. Arguably as  a consequence of the lack of progress at the multilateral  arena, the U.S. has embarked
on bilateral trade  negotiations with several countries, but with a particular  emphasis with Western Hemisphere partners. Thus, over the  last 10 years it has ratified trade agreements with Chile,  Peru, Costa Rica, Dominican Republic, El Salvador,  Guatemala, Honduras, and Nicaragua (the last six as part of  the DR-CAFTA Agreement), and signed but not yet ratified  agreements with Colombia and Panama. Following Trefler  (1993), a simultaneous equation model is developed to  estimate the correlation between the change in market  access (ΔMA) as a result of free trade negotiations, and a  number of political economy (PA) and negotiation context  (NC) variables suggested by the endogenous tariff theory to  be associated with the level of protection granted to a  sector. The change in market access in the context of this  study is represented by changes in import tariffs and  tariff-rate-quotas
negotiated as part of the preferential  trade agreements (PTAs). While we acknowledge  the
increasing importance of non-tariff barriers (other  than TRQs) as a way to afford protection from imports, PTAs  usually do not include specific outcomes on NTBs, and  therefore gauging the change in NTBs resulting from a PTA  is not possible. Negotiation process variables (NP)  primarily bargaining strategies, are seen by many scholars  as important intervening variables to explain the pattern  of market access achieved in bargaining. By focusing on  sensitive agricultural products, this study controls for  (NP) variables, since negotiations on sensitive  agricultural products between the U.S. and its developing  Western Hemisphere partners are assumed to have entailed  the use of strong bargaining strategies on both sides.  Political economy variables subject to be used are economic  size, concentration ratios, import penetration ratios and  their change, capital/labor ratios, and sectoral to total  labor ratios, all argued to be positively related to the  level of protection granted to a sector. Among feasible  negotiation context variables are relative power of  nations, foreign direct investment in the partner’s  economy, unemployment rate, and tax structure (dependence  on import policies as a source of revenues). The level of  imports (IMP) is modeled to be a function of comparative  advantage variables (CA) and the change in market access  ΔMA. ΔMA = f(PA, NC NP) IMP = f(CA, ΔMA)
The findings from  the quantitative assessment are to be complemented with  findings from selected
case studies, thus expanding our  understanding of the factors affecting the outcome of  the
bargaining activity over sensitive agricultural  products in the context of preferential trade
agreements.},
      url = {http://ageconsearch.umn.edu/record/103835},
      doi = {https://doi.org/10.22004/ag.econ.103835},
}