POLI 359 Lecture Notes - Lecture 14: Trade Diversion, Trade Creation, Free Trade

• School: McGill University
• Department: Political Science
• Course: POLI 359
• Professor: Fernando Nunez- Mietz

Document Summary

Lecture 14: ptas: building blocks or stumbling blocks? this will be on the final exam. Not only to protect tariffs but also to establish trade governance. U. s. shoes (pretend these are a homogenous good): 15 euro. Morocco shoes: 13 euro. Algeria: 11 euro: trade diversion (after the morocco- us pta) Us shoes: 15 euro. Morocco shoes: 13 euro = 13. Tunisia shoes: 12 euro+ 3 euro tariff = 15 euro. Algeria shoes: 11 euro + 3 euro tariff = 14. Tunisia and algeria, and reduces them with morocco. If preferential liberalization really a free trade policy? social welfare government should sign trade creating agreements. Political interest governments may sign agreements that cater to specific interests (e. g. trade diverting agreements) Political policy or inclusion of trade- related issues in exchange for tariff reduction. Colombia- us tariff reduction in exchange of touch laws against drug cartel. Jordan- us tariff reduction in exchange of iprs protection.