On the Expected Economic Effects of Trade Liberalization and the Transatlantic Trade and Investment Partnership

Abstract

The economic contribution of this chapter is to explain the main theoretical channels through which trade liberalization leads to welfare gains and to highlight important differences between multilateral trade and bilateral or regional trade liberalization. The dominate mode of trade liberalization over the last two decades has been regional trade agreements (RTAs). After a general discussion on the main economic effects of RTAs, the chapter takes a closer look at the Transatlantic Trade and Investment Partnership. Even though the likelihood of a successful completion of this trade pact is slim in the short-run, it is worth assessing the expected economic effects of TTIP, in particular on the EU. The chapter ends with a word of caution on how we should think about any labor market effects associated with such a trade agreement.