The Purpose of Trade Agreements
This paper reviews the literature on governments' motivations for negotiating and joining international trade agreements. I discuss both normative explanations for trade agreements and explanations based on political-economy concerns. Most of the paper focuses on the purpose of multilateral agreements, but I do discuss briefly the reasons we might see governments forming preferential or regional trade agreements that exclude some countries.
This paper was prepared for the Handbook of Commercial Policy, edited by Kyle Bagwell and Robert Staiger. I am grateful to Daniel Goetz for excellent research assistance and to the editors for their comments on an earlier draft. I am also grateful to Henrik Horn, with whom I have discussed many of these issues before; see Grossman and Horn (2013). The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.