ABSTRACT
How to reconcile collective preferences for non-trade concerns of exporting and importing countries is the question raised in this chapter. Focusing on agriculture, we show that, in some cases, tariff barriers that could help satisfy collective preferences for non-trade concerns in a given country may generate a net cumulative welfare that exceeds the level created through free trade. However, unlike free trade, which theoretically creates winners only at country level, ‘collective preferences’-induced protectionism creates both winners and losers in comparison with free trade. Net cumulative welfare may be positive while domestic welfare is declining in one country. An international compensation mechanism is sketched out to address this issue, which could help both reconcile efficiency and cooperation and reveal the real value of collective preferences in any given country.
