Summary: This paper shows that bilateral free trade agreements can undermine political support for further multilateral trade liberalization. If a bilateral trade agreement offers disproportionate benefits to a country`s most important, their reserve value on the level of multilateral free trade will be increased and a multilateral agreement will be blocked. Bilateral agreements between countries with similar factor endowments will be most likely to have this effect. It also follows that bilateral free trade agreements can never increase political support for multilateral free trade. Copyright 1997 of the American Economic Association. American Economic Review is currently published by Esther Duflo Suppose two countries have the opportunity to negotiate a free trade agreement (FTA). Will a free trade agreement between these countries be politically viable? If so, what form will it take? We approach these issues with a political-economic framework that emphasizes the interaction between specific industry stakeholders and an incumbent government. We describe the economic conditions necessary for a free trade agreement to be a balancing result, both in the event that the agreement covers all bilateral trade and in the event that a small number of politically sensitive sectors can be excluded from the agreement. Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: EconPapers.repec.org/RePEc:aea:aecrev:v:87:y:1997:i:4:p:506-19 Order information: This magazine article can be ordered fromwww.aeaweb.org/journals/subscriptions Date: 1997 References: Add references to CitEc Citations: View citations in EconPapers (159) Track citations by RSS feed American Economic Review, vol. 85, 1995, pp.
667-690 citations courtesy of American Economic Review, 1997, vol. 87, edition 4, 506-19 Downloads: (Link leaves this page) links.jstor.org/sici?sici=0002-8282%2819970. O%3B2-Z&origin=repec Full Text (application/pdf) Full text access is limited to JSTOR subscribers. For more information, see www.jstor.org. Related Works:This article may be available elsewhere in EconPapers: Search for articles with the same title….