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A Study of the Political Economy of U.S. Trade Policy: Theory and Evidence from U.S. Free Trade Agreement

Author: WangXia
Tutor: MengXia
School: Nankai University
Course: World economy
Keywords: FTA Trade policy Political ecnomy Two level game theory
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Type: PhD thesis
Year: 2012
Downloads: 66
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Abstract


Trade policy is a kind of special public good,because it is chosen by thegovernment and is resulted by so many related factors.Political economy of trade isan important branch of the international political economy,and it is related with thetheory of economy and trade and the theory of politics and international relationshipas well.In this paper,we built our research on the industrial special group politics ofGrossman and Helpman(1994;1995;1996)’s theory or simply called the endogenoustariff theory,chose comparatively mature FTA trade policy of US as the main objectand used the political economy theory as the tool to analyse the two level game-playing system of the policy formation.The main points that the research was focused on are listed as below:In the course of global trade liberalization,FTA gradually becomes the mainrepresentative arrangement and the main coutries in the world began to establish theisown FTA strategy.So it is meaningful for us to study the development,trade policyand stategy of the U.S.FTA as the basic of the futural trend analysis of global trade.We found that the political economy theory of trade policy has been developedmaturely by the review of the related theory,but the domestic political economyanalysis of trade policy is still at a comparatively primary level,we try to clarify theanalytical tool of the political economy and use it practically in this paper.In the studying frame of the trade policy,it’s always recogonized the trade policyas a continual variable and always described by tariff rate.There is a different wayunder FTA policy frame,the policy is whether the government chose to join in theFTA,the policy of yes or no is really a dispersed variable and we chose to study thepolicy from the view of whether the industry is concluded into the set of exclusionindustries in this paper.Nowadays the study of economy and trade growth should be put into the globalenvironment,so if we want to know clearly about the FTA stategy of U.S.,we mustknow its foreign policy in the gobal developmental system firstly.In order to make the reseaching points above come true,we built a political economy analyzing system in this paper,and it is composing of several parts:thelogical analysis of the development of U.S.FTA;the theoretical analysis of FTA twolevel game playing theory;the empirical analysis of Korus FTA and the stategicalanalysis of U.S.FTA strategy.we will provide the detailed analysis blocks separatelyin Chapter3to Chapter6.We will introduce the background,the objects and thearrangement of this paper in Chapter1,make a comprehensive review of theresearching papers of the trade policy,especially the FTA policy in Chapter2andmake a detailed conclusion and provide some politial suggestions in the last chapter.The general conclusions of this paper are as following:1.From the theoretical view,although it is supposed more strict restraint underFTA policy frame,but we can conclude that the main policy-affecting factors arestill the same as the endogenous tariff theory:using the import penetration rate(valueadded/import)to describe the relative productive power of the industry in thebilateral trade;using the variable of whether there exists lobbying organization todescribe the political power of the industry;using the import demand elasticity todescribe the cost of the provided trade policy.2.We concluded the developmental rule of U.S.FTA and FTA policy by thelogical analysis of the history of U.S.FTA development and we complete theconlusion by tracing time and space.3.We conluded the main characteristics of U.S.FTA strategy.In order toachieve the aim,we first analysed U.S.President Barrack Obama’s smart powerforeign policy and found that the FTA policy is truly the smart power policy carriedout in the foreign trade domain.In the analytical course of the smart power policy wesummarize the detailed characteristics of U.S.FTA strategy.

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