Escape And Entry Mechanisms In The Multilateral Trade System
Escape mechanisms from trade agreements are necessary because such agreements are incomplete, self-enforcing, contracts negotiated when the future is unknown. The essence of multilateral escape mechanisms is the principle of equivalent withdrawal of concessions, which allows trade agreements to result in efficient outcomes but implies that realized liberalization will be at the pace preferred by the most reluctant liberalizers. This in turn implies a possibly beneficial role for unilateral escape mechanisms featuring discrimination and partial compensation for restricted exporters. The fact that a large part of the globe, hitherto aloof from the multilateral trading system, is now actively trying to join it generates a critical need for entry mechanisms. Regional trade agreements provide entry mechanisms that maximize the extent of successful reform.