International and Spatial Economics Field Seminar: Gerald Willmann (Universitat Bielefeld and IFW)

Title: "Can plurliateral agreements facilitate global trade liberalization?", with L. Chochua (TSU ISET) and J. Lake (U. Tennessee)

  • Date: 30 October 2025 from 14:30 to 15:30

  • Event location: Auditorium - Piazza Scaravilli, 1 + Microsoft Teams Meeting

Abstract

The last successful round of global trade negotiations was the 1994 Uruguay Round and there is no indication of when the next successful round of negotiations might begin. While the proliferation of Preferential Trade Agreements in recent decades has continued to reduce bilateral trade barriers around the world, there is some evidence that “plurilateral agreements” can substantially reduce MFN tariffs for most countries on a significant portion of global trade within a particular sector. The prime example is the Information Technology Agreement to which most countries are signatories and which reduces MFN tariffs to zero on hundreds of traded IT products. Talks within the WTO have begun over a similar kind of “environmental goods” plurilateral agreement covering goods that boost sustainable production and consumption. We incorporate plurilateral agreements by extending previously used models of endogenous trade agreements to determine the equilibrium network of trade agreements between three countries. We show how plurilateral agreements can facilitate global trade liberalization by either overcoming an “exclusion incentive” that would otherwise lead to dominant countries excluding the non-dominant country from negotiated trade liberalization or overcoming a “free riding incentive” that would otherwise lead a dominant country to abstain from negotiated trade liberalization.

Local Organizer: Filippo Santi, Gianandrea Lanzara, Alfredo Minerva