%0 Journal Article %A World Trade Organization %T Why are Trade Agreements more Attractive in the Presence of Foreign Direct Investment? %D 1998 %J WTO, %V %R https://doi.org/10.30875/ede7ca61-en %I WTO, %X This paper argues that interests of nationals and owners of home-based foreign capital in the formation of a Trade Agreements (TA) are not antagonistic, except under rather particular assumptions on initial tariffs among potential members. Further, if initial tariffs are endogenously determined through an industry-lobbying process, then TA that would have been immiserising in the absence of Foreign Direct Investment (FDI), may be welfare-enhancing in the presence of foreign-owned firms. The rationale is linked to the effect that the entry of FDI has on the pre-TA tariff, through contributions to the incumbent government. These results may help explain recent integration programs between developed and developing countries. %U https://www.wto-ilibrary.org/content/papers/25189808/9