City Research Online

Abstract

Under Fast-Track Authority (FT), the US Congress commits to an up-or-down vote without amendments for any trade agreement presented for ratification. We interpret FT in terms of a hold-up problem. If the US negotiates an agreement with a smaller economy, businesses there may make sunk investments for the US market. At the ratification stage, the partner economy will be locked in to the US in a way it was not previously and Congress can make changes adverse to the partner, so to convince the partner to negotiate, it must first commit not to amend the agreement. FT is then Pareto-improving.

Publication Type:	Article
Additional Information:	© 2020. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Publisher Keywords:	Fast-track authority, Trade policy, Hold-up, Rules of origin, Trade agreements
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance J Political Science > JK Political institutions (United States) J Political Science > JZ International relations
Departments:	School of Policy & Global Affairs > Economics
SWORD Depositor:	Symplectic Administrator

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