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Seminar paper from the year 2011 in the subject Economics - Micro-economics, grade: 2,0, Christian-Albrechts-University of Kiel (Institut für Volkswirtschaftslehre), course: Economics of European Integration, language: English, abstract: In chapter two we saw three main effects of trade liberalization: Juggernaut, domino and race to the bottom. The multilateral Juggernaut effect uses the principle of reciprocity to explain that a final tariff of zero is possible when all goods are traded and negotiation is held long enough. Domino effects on a regional base occur, when countries find it political optimal to lower the tariffs which they earlier found to be protect worthy. An early participation in the RTA prohibits from losing connection in inter-national manufacturing diversion. Domino hereby means that outsider want to join, when other countries previously joined. This leads to the basic assumption: Be the first and be the biggest company to gain cost advantages. Smaller companies will exit through import com-petitors. Unilateral race to the bottom tariff cutting is relevant to Asia and is motivated by the wish to participate from out sourced workload of devel-oped countries...