Trade Agreements and Enforcement : Evidence from WTO Dispute Settlement
This paper examines the implications of the terms-of-trade theory for the determinants of outcomes arising under the enforcement provisions of international agreements. Like original trade agreement negotiations, the paper models formal trade dispu...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/04/24402477/trade-agreements-enforcement-evidence-wto-dispute-settlement http://hdl.handle.net/10986/21856 |
| Summary: | This paper examines the implications of
the terms-of-trade theory for the determinants of outcomes
arising under the enforcement provisions of international
agreements. Like original trade agreement negotiations, the
paper models formal trade dispute negotiations as
potentially addressing the terms-of-trade externality
problem that governments implement import protection above
the globally efficient level so as to shift some of the
policys costs to trading partners. The approach is to extend
earlier theoretical models of trade agreement accession
negotiations to the setting of enforcement negotiations in
order to guide the empirical assessment. The paper uses
instrumental variables to estimate the model on trade volume
outcomes from World Trade Organization (WTO) disputes over
1995–2009. The evidence is consistent with theoretical
predictions that larger import volume outcomes are
associated with products that have smaller increases in
foreign exporter-received prices (terms-of-trade losses for
the importer) as a result of the dispute, larger pre-dispute
import volumes, larger import demand elasticities, and
smaller foreign export supply elasticities. Dispute
settlement outcome differences are also explained by
variation in institutionally-motivated measures of
retaliation capacity and the severity of the free-rider
problem associated with foreign exporter concentration. |
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