The Political Economy of Deep Integration
Modern trade agreements no longer emphasize basic trade liberalization but instead focus on international policy coordination in a much broader sense. In this paper we introduce the emerging literature on the political economy of such deep integration agreements. We organize our discussion around three main points. First, the political conflict surrounding trade agreements is moving beyond the classic antagonism of exporter interests who gain from trade and import-competing interests who lose from trade. Second, there is a more intense popular backlash against deep integration agreements than there was against shallow integration agreements. And third, the welfare economics of trade agreements have become more complex, in the sense that the insight that "free trade is good" is no longer sufficient as a guide to evaluating the efficiency of international agreements.
We thank Emily Blanchard and Michael Blanga-Gubbay for helpful comments. Maggi gratefully acknowledges funding from the National Science Foundation grant No. 1949374. Ossa gratefully acknowledges funding from the European Research Council (ERC) under the European Union's Horizon 2020 research and innovation program (grant agreement No. 819394). The usual disclaimer applies. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.