The Common External Tariff in a Customs Union: Voting, Logrolling, and National Government Interests

Tavares, Samia (2006): The Common External Tariff in a Customs Union: Voting, Logrolling, and National Government Interests.

Abstract

Missing from the analysis of customs unions has been a consideration of collective decisionmaking by countries regarding the union’s common trade policy. In the case of the common European external tariff, how governments voted was not public information. This paper uses a unique dataset to derive member states’ tariff preferences, which are then used to establish the decision rule before 1987, when individual governments had veto power. Results indicate a principle of unanimity, as well as the presence of logrolling. The political equilibrium for the common external tariff is also illustrated to have shifted as a result of union enlargements.

• Item Type: MPRA Paper
• Institution: Rochester Institute of Technology
• Language: English
• Keywords: Collective decisions; tariff preferences; political economy; European Community; decisive voter
• Subjects: F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations

References

Baldwin, Robert E. and Christopher S Magee. (2000). “Is Trade Policy for Sale? Congressional Voting on Recent Trade Bills.” Public Choice, vol. 105, nos. 1-2, pp. 79-101 Cadot, Olivier, Jaime de Melo and Marcelo Olarreaga. (1999). “Regional Integration and Lobbying for Tariffs Against Non-Members.” International Economic Review, vol. 40 no. 3 (August), pp. 635-57. Davidson, Russell and James G. MacKinnon. (1981). “Several Tests for Model Specification in the Presence of Alternative Hypotheses.” Econometrica, vol. 49, pp. 781-93. Directorate General External Relations (2001) “Textiles.” http://europa.eu.int/comm/trade/goods/textile/index_en.htm. European Commission. (2002). The European Union: A Guide for Americans. http://www.eurunion.org/. European Communities (1999). Serving the European Union: A Citizen’s Guide to the Institutions of the European Union. Luxembourg: Office for Official Publications of the European Communities. Feenstra, Robert, Robert Lipsey, Haiyan Deng, Alyson Ma, Hengyong Mo. (2005). “World Trade Flows: 1962-2000.” NBER Working Paper 11040. Findlay, Ronald and Stanislaw Wellisz. (1982). “Endogenous Tariffs, the Political Economy of Trade Restrictions, and Welfare,” in Jagdish Bhagwati, ed. Import Competition and Response. Chicago: University of Chicago Press. Gawande, Kishore and Usree Bandyopadhyay. (2000). “Is Protection for Sale? Evidence on the Grossman-Helpman Theory of Endogenous Protection.” Review of Economics and Statistics, vol. 82, no. 1, pp. 139-52. Goldberg, Pinelopi Koujianou and Giovanni Maggi. (1999). “Protection for Sale: An Empirical Investigation.” American Economic Review, vol. 89, no. 5, pp. 1135-55. Greenaway, D. and R. C. Hine. (1993). “Trade Policy and Protection in the European Community.” Open Economies Review, vol. 4, pp. 433-56. Greene, William H. (1997). Econometric Analysis. Upper Saddle River, NJ: Prentice Hall. Grossman, Gene and Elhanan Helpman. (1994). “Protection for Sale.” American Economic Review, vol. 84, pp. 833-50. Hillman, Arye L. (1982). “Declining Industries and Political-Support Protectionist Motives.” American Economic Review, vol. 72, pp. 1180-1187. Hillman, Arye L. (1991). “Protection, Politics, and Market Structure,” in Elhanan Helpman and Assaf Razin, eds. International Trade and Trade Policy. Cambridge, MA: MIT Press. Hillman, Arye L. (2003). Public Finance and Public Policy: Responsibilities and Limitations of Government. New York, Cambridge University Press. Hillman, Arye L., Ngo Van Long, and Antoine Soubeyran. (2001). “Protection, Lobbying and Market Structure.” Journal of International Economics, vol. 54, pp. 383-409. Hillman, Arye L. and Heinrich Ursprung. (1988). “Domestic Politics, Foreign Interests, and International Trade Policy.” American Economic Review, vol. 78, no. 4 (September 1988), pp. 729- 745. Hine, R. C. (1985). The Political Economy of European Trade: An Introduction to the Trade Policies of the EEC. New York: St. Martin’s Press, Inc, 1985. Lee, Jong-Wha and Philip Swagel. (1997). “Trade Barriers and Trade Flows Across Countries and Industries.” Review of Economics and Statistics, vol. 79, no. 3, pp. 372-82. Marvel, Howard P. and Edward J Ray. (1987). “Intra-Industry Trade: Sources and Effects on Protection.” Journal of Political Economy, vol. 95, no. 6, pp. 1278-91. Mazey, Sonia and Jeremy Richardson, eds. (1993). Lobbying in the European Communities. Oxford: Oxford University Press. Mayer, Wolfgang. (1984). “Endogenous Tariff Formation.” American Economic Review, vol. 74 no. 5, pp. 970-85. Olarreaga, Marcelo, Isidro Soloaga and L. Alan Winters. (1999). “What’s behind Mercosur’s Common External Tariff?” World Bank Policy Research Working Paper 2231 (November). Pecorino, Paul. (1998). “Is there a Free-Rider Problem in Lobbying? Endogenous Tariffs, Trigger Strategies, and the Number of Firms.” American Economic Review, vol. 88, no. 3, pp. 652- 60. Rodrik, Dani. (1995). “Political Economy of Trade Policy,” in Gene Grossman and Kenneth Rogoff, eds. Handbook of International Economics, Volume 3. Amsterdam: North Holland. Romer, Thomas and Howard Rosenthal. (1982). “Median Voters or Budget Maximizers: Evidence from School Expenditure Referenda.” Economic Inquiry, vol. 20, pp. 556-77. Stratmann, Thomas. (1992). (1997). “Logrolling,” in Dennis C. Mueller, ed. Perspectives on Public Choice: A Handbook. Cambridge: Cambridge University Press, 1997. Trefler, Daniel. (1993). “Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy.” Journal of Political Economy, vol. 101, no. 1, pp. 138-160. Widgren, Mika. (1994). “Voting Power in the EC Decision Making and the Consequences of Two Different Enlargements.” European Economic Review, vol. 38, no. 5, pp. 1153-70. Winters, L. Alan. (1994). “The EC and Protection: the Political Economy.” European Economic Review, vol 38, nos. 3-4, pp. 596-603. World Trade Organization. (1998). Trade Policy Review: European Union 1997. Geneva: WTO.