The French (Trade) Revolution of 1860: Intra-Industry Trade and Smooth Adjustment

Stéphane Becuwe, Bertrand Blancheton, Christopher M. Meissner

NBER Working Paper No. 25173
Issued in October 2018, Revised in September 2019
NBER Program(s):Development of the American Economy, International Trade and Investment

The Cobden-Chevalier treaty of 1860 eliminated many French import prohibitions and lowered tariffs between France and Britain. Policy change was largely unexpected and unusually free from direct lobbying. A series of commercial treaties with other nations followed because of the use of the unconditional-MFN clause. Post-1860 in France, we find a significant rise in intra-industry trade. On average, rising imports did not prejudice exports. Liberalization allowed for an expansion of two-way trade in differentiated products. The findings are consistent with the “smooth adjustment” hypothesis. Anti-competitive, protectionist lobbying apparent from 1878 was not necessarily a backlash to enhanced international competition.

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Acknowledgments

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Document Object Identifier (DOI): 10.3386/w25173