2014 Endogenous Free Trade Agreements and

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1、ReviewofInternationalEconomics,22(3),561577,2014DOI:10.1111/roie.12123EndogenousFreeTradeAgreementsandForeignLobbyingAndreyStoyanov*AbstractThispaperassessesthepoliticalviabilityoffreetradeagreements(FTAs)inthepresenceoflobbyingbyorganizedforeigninterestgroups.Theassessmentisbasedon

2、amodelinwhichexternaltariffsandthedeci-siontoformanFTAareendogenouslydetermined.TheÞndingsdemonstratethat,inthepresenceofanorganizedlobbygroupinaprospectivepartnercountry,anFTAmayinitiateanincreaseinthelevelofpro-tectionagainstimportsfromthirdcountriesandimpedetradewithnon-membercou

3、ntries.Further,thisstudyÞndsthataforeignlobbymayencouragethelocalgovernmenttoenterawelfare-reducingtrade-divertingFTA.Finally,thispapershowsthatanFTAincreasesthelobbyingpoweroftheorganizedlobbygroupsofthemembercountries,whichcanpotentiallyobstructtheviabilityofwelfare-improvingmulti

4、lat-eraltradeliberalization.1.IntroductionRegionaltradeagreements(RTAs)havebecomethemostpreferablemodeoftradeliberalizationformanycountriessincethecompletionoftheUruguayRoundoftheWorldTradeOrganizationnegotiations.Inmanycases,regionalfreetradetalksareinitiatedbyprivatebusinessgroups

5、fromoneoftheproposedRTAmembercountriesandthennegotiatorsfromallsidesbegintoworkoutthedetailsofthepotentialtradeagreement.Notsurprisingly,thesebusinessgroupsareoftenactivelyinvolvedintradenegotiations,andtheylobbyfortraderegimesmorefavorabletotheirinterests.Moreover,sinceanRTAmustbes

6、upportedbyallofitsmembers,specialinterestgroupscanlobbygovernmentsfromothercountriesinvolvedintheproposedagree-mentfororagainstfreetrade,eitherdirectlyorindirectlythroughtheirhomecoun-tryÕsgovernment.Asaresult,manytradeagreementsareformedinthepresenceofpoliticalpressurefromtheprospe

7、ctivepartnercountryindustries.Thispaperanalyzeswhattypesofagreementsaremorelikelytobeformedwhenspecialinterestgroupsbecomeinvolvedintheregionalfreetradetalks.Toanswerthisquestion,Iintroducethepossibilityofforeignlobbyingintoaconventionalpoliticaleconomymodelofafreetradeagreement(FTA

8、),similartoGrossman