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Discrimination in international trade: A different perspective

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Abstract

Discrimination is generally conceived of as a feature of protectionism and the source of retaliatory spirals. In this paper, I argue that this perspective on trade discrimination is conceptually and empirically deficient. The extent of discrimination is almost exclusively considered with respect to the form of cooperation, that is, the number of countries that cooperate. This view disregards the fact that the bargaining approach also determines the extent to which a country can discriminate in concession-making. By neglecting the bargaining method, the existing literature tends to underestimate the prevalence of discriminatory treatment in international trade and in periods of liberalization in particular. Furthermore, a case study of the government procurement negotiations at the Uruguay Round shows that discrimination between countries and items may go along with and actually promote liberalization. On the basis of these insights, I make a first step toward a better understanding of discrimination by developing a baseline model explaining liberalization through discrimination.

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Notes

  1. For helpful comments my thanks goes to two anonymous reviewers, Hans Keman, Philipp Genschel, Markus Jachtenfuchs, Peter Mayer, Thomas Rixen and Susanne Uhl. Irina Wiegand and Eric Schaefer provided valuable research assistance. All remaining errors are my own. This work was initiated when I was a research associate at the Jacobs University and the Collaborative Research Center Transformations of the State. Generous funding was granted by the German National Science Foundation (DFG).

  2. One might wonder where regionalism, probably the most intensively debated form of cooperation in the current scholarly literature, fits into this conceptual scheme. A look at the number of treaty states of regional agreements shows that they overwhelmingly are bilateral (WTO, 2003).

  3. The opportunity to determine the items to be subsumed under the formula makes it possible to discriminate between countries by selectively picking commodities that are and are not made subject to an across-the-board cut. Thus, countries always have some means to discriminate in concession-making.

  4. For reasons of illustrative convenience, I will just distinguish between an item-by-item approach and a formula approach in the following.

  5. As it is beyond the scope of my paper, I cannot deliver a stylized history detailing which of the modes was more frequently chosen than others at a given period in the history of trade.

  6. The empirical material that I present in the following is derived from a broad range of secondary sources written by experts that closely observed the development of public procurement liberalization and the Uruguay Round negotiations in particular.

  7. Exporters want free access to foreign markets. As foreign import-competers will lobby against liberalization so as to prevent increased imports, political actors abroad will find it difficult to unilaterally reduce trade barriers. However, it is possible to engage in conditional liberalization, that is, the political actors at home and abroad exchange easier access to each other's market (Milner and Yoffie, 1989).

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  1. Department of Management, Economics and Social Sciences, University of Cologne, Gottfried-Keller-Street 6, Köln, 50931, Germany

    Ingo Rohlfing

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Rohlfing, I. Discrimination in international trade: A different perspective. Acta Polit 44, 192–210 (2009). https://doi.org/10.1057/ap.2008.23

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