Publication Type

Working Paper

Version

publishedVersion

Publication Date

5-2024

Abstract

This paper introduces a quantitative framework to analyze the WTO’s reciprocity principle. Utilizing two polar bargaining environments, we measure terms-of-trade concessions among WTO members and examine how shifts in applied tariffs and economic fundamentals affect bilateral and multilateral balance of concessions. We find significant disparities in concessions, largely driven by the rise in trade imbalances since the early 1990s. Notably, although US-China bilateral tariffs suggest considerable terms-of-trade benefits for China, under a hypothetical balanced trade scenario, their relationship evolves towards near reciprocity following China’s accession to the WTO. Furthermore, in contrast to the significant gains in its relationship with the US, China experiences a terms-of-trade loss in its bilateral relationships with other WTO members. Lastly, we offer insights into the magnitude of concessions exchanged by countries at different levels of development.

Keywords

WTO, reciprocity, trade concessions, terms-of-trade, bilateral tariffs, multilateral balance, trade imbalances, US-China trade, economic fundamentals, development economics

Discipline

Asian Studies | International Economics

Research Areas

International Economics

First Page

1

Last Page

43

Publisher

SMU Economics and Statistics Working Paper Series, Paper No. 05-2024

City or Country

Singapore

Embargo Period

7-2-2024

Copyright Owner and License

Authors

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