Enduring trade disputes: Disguised protectionism and duration and recurrence of international trade disputes

Abstract

Why do some WTO trade disputes endure and recur while others do not? States have difficulty resolving trade conflicts when they involve certain types of trade-restrictive domestic regulations. While such regulations vary in their extent of legitimacy—fulfilling non-trade domestic regulatory objectives and availability of less trade-restrictive options—complainant states cannot always distinguish legitimate barriers from illegitimate ones. In such scenarios of disguised protectionism, which I argue is most prevalent with policies involving WTO’s Sanitary and Phytosanitary (SPS) Agreement, disputants confront difficulties concluding their disputes. Disputes last longer and are more likely to recur. I test the argument against a data set of WTO disputes structured in an innovative manner—one that links together related and recurring disputes into single conflicts. Both an event history analysis of conflict duration and a count analysis of conflict recurrence using this data strongly support this argument.

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Notes

  1. 1.

    See Leitner and Lester (2015) and the preceding annual pieces for descriptive summaries of trade disputes at the WTO.

  2. 2.

    “China–U.S. Trade Dispute Has Broad Implications,” The New York Times, September 15, 2009.

  3. 3.

    I thank Leslie Johns for suggesting this framework for casting the two types. The formulation is also similar to Carrubba (2005), in which two countries have different costs to compliance.

  4. 4.

    The existence of alternative policies that are multilaterally more acceptable as a component of legitimacy is similar to Pelc (2010).

  5. 5.

    Alternatively, the complainants’ discount factor can be specified so that they choose to settle now rather than engage in a drawn-out bargaining against the sincere type.

  6. 6.

    A contrasting approach would be to have different time horizons and discount values for the bargainers (e.g., Cramton 1984).

  7. 7.

    The parameter that captures the uncertainty in Grossman and Perry (1986b) is a probability distribution F(r) bounded by r l , a low reservation value assessment of the respondent type by the complainant and r h , a high reservation value. The information precision is decreasing in the distance between the bounds.

  8. 8.

    “Understanding the WTO Agreement on Sanitary and Phytosanitary Measures.” World Trade Organization (WTO). https://www.wto.org/english/tratop_e/sps_e/spsund_e.htm. Accessed May 12, 2015.

  9. 9.

    Accordingly, this is different from Bown and Reynolds (2015), who identify common disputes based on repeating patterns of complainant-disputed policy.

  10. 10.

    The results of these robustness checks are available on the journal’s website.

  11. 11.

    http://www.wto.org/english/tratope/dispue/dispustatuse.htm. Accessed September 11, 2014.

  12. 12.

    The results of these robustness checks are available on the journal’s website.

  13. 13.

    For the EU, the rounded average Polity score among the evolving membership does not fall below 10.

  14. 14.

    An alternative approach would track changes in respondents’ policy, which can mark the start of a conflict a la Bown and Reynolds (2015).

  15. 15.

    TRIMs has the lowest maximum number of provisions cited—4—and the fewest cases of positive counts.

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Acknowledgments

The research for this article was generously supported by the Colorado European Union Center of Excellence (CEUCE) and the Center to Advance Research and Teaching in the Social Sciences (CARTSS) at the University of Colorado at Boulder. Earlier versions of this article were presented at the 2011 Annual Meeting of the Midwest Political Science Association, the Institutions Group of the Institute of Behavioral Science (IBS) at the University of Colorado at Boulder, and Governance and Conflicts Workshop sponsored by CU Political Science and One Earth Foundation. I amgrateful for comments I received at these venues. I would like to especially thank David Bearce, Carew Boulding, David Brown, Julia Gray, Bobby Gulotty, Johannes Karreth, Soo Yeon Kim and Sarah Sokhey for helpful comments. Cliff Carrubba and Leslie Johns provided useful guidance on specifying the bargaining model portion of the argument. Jeff Kucik and Krzysztof Pelc provided me the trade data for WTO disputes. Chris Cyr and Megan Roosevelt provided valuable research assistance for the project. Lastly, two anonymous reviewers patiently encouraged me along through major revisions of the manuscript.

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Correspondence to Moonhawk Kim.

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Kim, M. Enduring trade disputes: Disguised protectionism and duration and recurrence of international trade disputes. Rev Int Organ 11, 283–310 (2016). https://doi.org/10.1007/s11558-015-9230-z

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Keywords

  • GATT/WTO
  • Dispute settlement
  • Domestic regulations
  • Protectionism

JEL Classification

  • C41
  • F13
  • F51