International Competition and Adjustment: Evidence from the First Great Liberalization

Stéphane Becuwe, Bertrand Blancheton, Christopher M. Meissner

NBER Working Paper No. 25173
Issued in October 2018, Revised in November 2018
NBER Program(s):Development of the American Economy, International Trade and Investment

The Cobden-Chevalier treaty of 1860 eliminated French import prohibitions and lowered tariffs on France in Britain. Policy change was unexpected by French industry and entirely free from lobbying. A series of commercial treaties with other nations followed because of the (first-ever) use of an MFN clause. Post-1860 we find a significant rise in intra-industry trade. Rising imports met with higher exports. Liberalization allowed for an expansion of exports in differentiated products instead of eliminating French exports. The findings are consistent with the “smooth adjustment” hypothesis. Anti-competitive, protectionist lobbying apparent from 1878 was not a backlash to international competition.

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Acknowledgments and Disclosures

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Document Object Identifier (DOI): 10.3386/w25173