Fast-track authority: a hold-up interpretation

0534246 - NHU-C 2021 RIV NL eng J - Journal Article
Celik, Levent - Karabay, B. - McLaren, J.
Fast-track authority: a hold-up interpretation.
Journal of International Economics. Roč. 127, November (2020), č. článku 103392. ISSN 0022-1996. E-ISSN 1873-0353
Institutional support: Progres-Q24
Keywords : fast-track authority * trade policy * hold-up
OECD category: Economic Theory
Impact factor: 3.373, year: 2020
Method of publishing: Limited access
https://doi.org/10.1016/j.jinteco.2020.103392

Under Fast-Track Authority (FT), the US Congress commits to an up-or-down vote without amendments for any trade agreement presented for ratification. We interpret FT in terms of a hold-up problem. If the US negotiates an agreement with a smaller economy, businesses there may make sunk investments for the US market. At the ratification stage, the partner economy will be locked in to the US in a way it was not previously and Congress can make changes adverse to the partner, so to convince the partner to negotiate, it must first commit not to amend the agreement. FT is then Pareto-improving.
Permanent Link: http://hdl.handle.net/11104/0312471