Abstract
Developing countries coalitions form an integral part of tariff negotiations that take place under the aegis of the World Trade Organization. While there was only a single coalition in the 70s, their number increased to 31 in the year 2005. Despite the apparent proliferation of coalitions in tariff negotiations, little research on their theoretical and empirical implications has been produced. In particular, we lack an understanding of efficiency and equity effects of coalitions. By exploring this equity-efficiency nexus, the study finds that developing countries coalitions like the G-90 and the Least Developed Countries Group – while benefiting member countries – lead to less efficiency and less equity overall. Forming the Cairns Group, however, leads to a more efficient and equal distribution of the gains from trade.
Highlights
Coalitions like the G-10, G-20, G-90, Cairns or the Least Developed Countries (LDC) Group form an integral part of tariff negotiations that take place under the aegis of the World Trade Organization (WTO)
We assume that only countries/regions/coalitions with a share of at least one per cent in world trade are large enough to have a voice in the negotiations
The Cairns Group of agricultural exporters leads to more liberalization and more equality, whereas the opposite is true for the G-90 and the LDC Group
Summary
Coalitions like the G-10, G-20, G-90, Cairns or the Least Developed Countries (LDC) Group form an integral part of tariff negotiations that take place under the aegis of the World Trade Organization (WTO). Despite of the apparent proliferation of coalitions in tariff negotiations, surprisingly little research on their theoretical and empirical implications has been produced, see Rolland (2007). Coalitions may act as a means to improve the bargaining outcome of weaker countries, see WTO (2012). By giving weaker countries a stronger voice, coalitions should lead to a more equal division of gains from trade. Some authors agree that active participation of certain coalitions is one of the main reasons for the Doha stalemate, compare Narlikar (2005),
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