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Lobbying on free trade agreements has been dominated by a few very large firms, which experience large gains as a result of the entry into force of these agreements. By contrast, losing firms have had no voice in the lobbying process, finding it too costly to be politically organized.
Recent decades have seen a proliferation of regional trade agreements. There are currently more than 300 of these agreements in force, most of which take the form of free trade agreements (FTAs). For example, the United States has 14 FTAs in force with 20 countries, including the North American Free Trade Agreement (NAFTA) and the US-Korea Free Trade Agreement (KORUS). Multilateral rules require members of regional trade agreements to reciprocally eliminate “duties and other restrictive regulations of commerce” on “substantially all the trade” between them.
According to Dani Rodrik , FTAs “are shaped largely by rent-seeking, self-interested behavior on the export side. Rather than rein in protectionists, they empower another set of special interests and politically well-connected firms, such as international banks, pharmaceutical companies, and multinational corporations.”
Rodrik’s argument seems in contrast with the standard view that trade liberalization is opposed by import-competing interests who lobby in favor of protection. This standard […]