Chapter II: Why trade agreements at all?
Chapter 2 addresses the question of why countries are motivated to enter into trade agreements with other countries with which they may wish to trade, and emphasizes that in the absence of international trade agreements countries will be tempted to adopt beggar thy neighbour policies with actual or potential trading partners, potentially provoking retaliation by these partners and yielding zero-sum outcomes for all the trading partners involved. Trade agreements also provide a mechanism by which countries can manage the domestic politics surrounding trade policy by enlisting export oriented industries as a counterweight to import impacted domestic industries and by mitigating transition costs as resources gravitate from contracting to expanding industries.
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