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What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization (2006)
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BibTeX
@MISC{Bagwell06whatdo,
author = {Kyle Bagwell and Robert W. Staiger},
title = { What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization},
year = {2006}
}
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Abstract
What do trade negotiators negotiate about? There are two distinct theoretical approaches in the economics literature that offer an answer to this question: the terms-of-trade theory and the commitment theory. The termsof-trade theory holds that trade agreements are useful to governments as a means of helping them escape from a terms-of-trade-driven Prisoners ’ Dilemma. The commitment theory holds that trade agreements are useful to governments as a means of helping them make commitments to the private sector. These theories are not mutually exclusive, but there is little direct evidence on the empirical relevance of either. We attempt to investigate empirically the purpose served by market access commitments negotiated in the World Trade Organization. We find broad support for the terms-of-trade theory in the data. We claim more tentatively to find support in the data for the commitment theory as well.
Keyphrases
world trade organization empirical evidence trade negotiator negotiate commitment theory trade agreement terms-of-trade theory little direct evidence economics literature empirical relevance terms-of-trade-driven prisoner dilemma termsof-trade theory private sector distinct theoretical approach trade negotiator broad support market access commitment
