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Deliberative Trade Policy

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Abstract

Trade policy is normally evaluated according to the standards of allocative efficiency. In contrast, this paper tries to understand trade policy as a solution to the problems of international communication among governments. Basic categories of speech act theory are applied on political action, an approach that I merge with the “cheap talk” paradigm in economics. As a result, I distinguish between trade policy being negotiated via verbal and non-verbal communication, and trade policy as a non-verbal means of deliberation among governments. I apply this approach on a number of recent empirical studies on trade policy, and I draw normative conclusions for the communicative design of international trade policy. The criterion of successful communication replaces the criterion of allocative efficiency, so that well-established results of the political economy of trade appear in a new light. In particular, many institutions and practices of international trade policy that directly contradict efficiency criteria can be explained as enabling governments to communicate successfully and to reach a deliberative equilibrium in international political economy, which will be influenced by the given distribution of power across countries.

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Authors and Affiliations

  1. Witten/Herdecke University, Alfred-Herrhausen-Str. 50, D-58448, Witten, Germany

    Carsten Herrmann-Pillath (Academic Director, Sino-German School of Governance, Chair of Evolutionary and Institutional Economics)

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  1. Carsten Herrmann-Pillath
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Correspondence to Carsten Herrmann-Pillath.

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Herrmann-Pillath, C. Deliberative Trade Policy. Evolut Inst Econ Rev 3, 209–238 (2007). https://doi.org/10.14441/eier.3.209

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