The French (Trade) Revolution of 1860: Intra-Industry Trade and Smooth Adjustment

The Cobden-Chevalier treaty of 1860 eliminated many French import prohibitions and lowered tariffs between France and Britain. Policy change was largely unexpected and unusually free from direct lobbying. A series of commercial treaties with other nations followed because of the use of the unconditional-MFN clause. Post-1860 in France, we find a significant rise in intra-industry trade. On average, rising imports did not prejudice exports. Liberalization allowed for an expansion of two-way trade in differentiated products. The findings are consistent with the “smooth adjustment” hypothesis. Anti-competitive, protectionist lobbying apparent from 1878 was not necessarily a backlash to enhanced international competition.