The Dynamics of Trade Liberalization

Vinod K. Aggarwal

Power, Interdependence and Non-State Actors in World Politics, 2008

My objective in this chapter is to build in the tradition of this research program on trade cooperation and conflict. In earlier work with Robert Keohane and David Yoffie, we focused on the evolution of different forms of trade protectionism. Here, drawing on Keohane’s work, the work of his other students, and other scholars who have focused on trade issues, I focus on forms of trade liberalization. To this end, Section II of this chapter begins by summarizing the general problem of understanding trade liberalization, the potential need and role of institutions, and their creation, and then examines different forms of trade governance based on several criteria. In Section III, I present an institutional bargaining game approach to address the question of the evolution of trade accords. I show how such an approach can help us to understand the building and modification of different types of international institutions in trade. Section IV applies this institutional bargaining approach to examine the development of trade arrangements in Northeast Asia (NEA) by constructing scenarios to explore the interaction of different variables in leading to different modes of trade governance. Section V concludes with an assessment of possible avenues to pursue in the broader research program of understanding the dynamics of trade liberalization.

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