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Trade, institutions, and the timing of GATT/WTO accession in post-colonial states

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Abstract

Prior to 1995, when the World Trade Organization (WTO) superseded the General Agreement on Tariffs and Trade (GATT), a number of states took advantage of GATT Article XXVI:5(c), which allowed them—as former colonies or component territories of existing GATT members—to quickly and simply join the multilateral trade regime. The speed with which these post-colonial accessions took place, however, varied widely: some states joined immediately upon independence, while others joined much later. Still other post-colonial states passed on this opportunity, only to subsequently begin the longer, more onerous accession process required of other GATT/WTO applicants. Our paper seeks to explain this variation in the timing of post-colonial states’ accession to the GATT/WTO. We argue that three key variables explain the timing of accession decisions: 1) a country’s trade ties with existing member-states; 2) its existing preferential trade agreement (PTA) commitments; and 3) its domestic political institutions—specifically, the country’s level of democracy. Furthermore, we argue that the effects of these variables are conditional upon each other: post-colonial countries with more extensive trade ties to existing member-states were more likely to accede rapidly under Article XXVI:5(c), but only under specific conditions—namely, when they had not already locked in ties with key trading partners through bilateral or regional PTAs, and when they were governed by a more democratic regime. We test this argument empirically using an original dataset of 61 post-colonial states from 1951 to 2004. Our results strongly support this explanation of GATT/WTO accession and help to clarify the pattern of participation in the multilateral trading system that we have observed over the last half-century.

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Notes

  1. For the purposes of this paper, we define a post-colonial state simply as an independent country that was formerly a colony or constituent part of an existing GATT member and was therefore eligible to join the GATT under Article XXVI:5(c). Although this term has been used widely in comparative politics to analyze the impact of colonial experience on politics and development in African countries and other former colonies (see, e.g., Young 2004), our definition is narrowly focused on classifying these states’ pathway of eligibility to join the GATT.

  2. GATT Document BISD 10S/73.

  3. GATT Document MTN.GNG/NG7/W/40/Rev.1, “De facto Status and Succession: Article XXVI:5(c),” 15 July 1988.

  4. GATT Document C/130, “De facto Application of the General Agreement” (28 June 1984), 1. Originally, this transitional period was “determined in each case by the contracting parties” (GATT Document BISD 65/12). It was later (1958) set at two years from the time of autonomy, although states frequently requested that this period be extended (GATT Document BISD 9S/17); since such extensions “had always been granted,” the GATT contracting parties decided in 1967 to allow states to extend their de facto status indefinitely (C/130, 2).

  5. C/130 (28 June 1984), 3. Although these de facto obligations were not mandatory, most post-colonial states (68% of country-years from 1948–1994) chose to abide by this de facto status while they remained formally outside of the GATT.

  6. Ibid, 1.

  7. While our theoretical focus here is on existing PTAs, this logic should also apply to prospective PTAs. Indeed, there is anecdotal evidence that some post-colonial states postponed GATT accession until their key PTAs had come into force. For example, Zambia spent 18 years in de facto status (1964–1982), becoming a full contracting party only once the treaty creating the Common Market of Eastern and Southern Africa (COMESA) was signed in December 1981; similarly, the Maldives spent 18 years in de facto status (1965–1983), joining the GATT fully only once it had signed a PTA with India, one of its largest trading partners, in 1981. MTN.GNG/NG7/W/40/Rev.1, 3.

  8. Countries and years included in the sample, as well as summary statistics for the variables used in our analysis, are available in the online Appendix on this journal’s webpage.

  9. Our results are substantively identical using three-year moving averages and one-year lagged values. Results available on request.

  10. As this variable measures only existing PTA agreements, rather than prospective PTAs currently under negotiation, it may actually underestimate the importance of this causal mechanism. If anything, this bias against finding a result strengthens our confidence in the significance of this variable in the analysis below. We thank Jon Pevehouse for sharing his PTA membership data (Mansfield et al. 2007).

  11. Unfortunately, data limitations on Polity reduce our sample to 61 countries and 891 observations, since this variable is unavailable for some countries (notably, many Caribbean islands) in our dataset, and because some country-years enter as missing values due to their coding as years of transition (−88), interregnum (−77), or regime interruption (−66) (Marshall et al. 2009). To address this problem, we have replicated our analysis using an alternative, binary measure of democracy from the Democracy and Dictatorship Revisited dataset (Cheibub et al. 2009), which is available for a broader sample of 73 countries (1110 observations). Since our results are substantively identical using this alternative measure (available on request), we report only the Polity results here.

  12. Once again, our results are not sensitive to alternative specifications of this variable (e.g., three-year moving averages and one-year lagged values). We employ the five-year averages here in order to capture both the level and trend of democracy/autocracy in a single variable.

  13. Ideally, we would prefer to incorporate one or more of the well-known policy- or flow-based indices of financial liberalization as measures of a country’s general degree of integration into the global financial system (e.g., Chinn & Ito 2008; Quinn and Toyoda 2007; Lane and Milesi-Ferretti 2007). Unfortunately, these existing data sources measuring capital account openness do not cover large portions of our country sample, nor do they extend back in time beyond the early 1970s.

  14. Data are taken from Copelovitch (2010) and Reinhart (2010).

  15. Because colonial relationships heavily cluster regionally (e.g., 70% of British colonies and 74% of French colonies were in the Middle East and Africa), these dummy variables may also be capturing cross-regional differences in the likelihood of rapid GATT/WTO accession. We omit regional dummies from our analysis for this reason, and because they are highly collinear with the colonial indicators.

  16. Years in this sense are equal to number of years from independence. Therefore, a tie can exist when two countries become independent in different years but both join in the third year of their independence. There are a number of ways to calculate the ordering of failures in the case of tied data, of which the Efron and exact partial likelihood methods are generally preferred to the Breslow method (Box-Steffensmeier and Jones 2004). The Efron method takes account of how the risk set changes depending on the sequencing of tied events; it adjusts the risk sets using probability weights (Efron 1977).

  17. This result also suggests the need to explore more fine-grained classifications of domestic regime type/institutions. In order to ascertain which components of regime type matter most in shaping accession decisions. We leave this for future research, given the length and scope of the current analysis.

  18. In order to ensure that we have captured the full set of conditional relationships in our models, we also analyzed specifications incorporating two-way interactions between GATT/WTO coverage and both IMF program and GATT/WTO regional coverage. Neither of these specifications, however, yielded significant results (results available on request). Thus, there is no evidence that GATT/WTO regional coverage plays a role in shaping states' preferences over the timing of GATT/WTO accession. Moreover, the effect of IMF programs on accession timing is not conditional on levels of GATT/WTO coverage.

  19. These calculations draw on the results of the logit analysis discussed below in the robustness checks, which yields substantively identical results to the hazard models used in Table 2. Utilizing the results of the logit specification enables us to take advantage of the Stata add-on software, CLARIFY, in order to calculate predicted probabilities at specific values of our covariates (King et al. 2003).

  20. Results of all of these robustness checks are available on request. We omit the tables for reasons of space.

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Acknowledgements

The authors thank Soo Yeon Kim, Jon Pevehouse, Judy Goldstein, Tobias Hofmann, Faisal Ahmed, three anonymous reviewers, and seminar participants at the University of Wisconsin–Madison for comments and suggestions. Earlier versions of this paper were presented at the 2009 International Political Economy Society conference and the 2010 Midwest Political Science Association conference.

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  1. Department of Political Science & Robert M. La Follette School of Public Affairs, University of Wisconsin–Madison, 306 North Hall, 1050 Bascom Mall, Madison, WI, 53706, USA

    Mark S. Copelovitch

  2. Department of Political Science, University of Wisconsin–Madison, 110 North Hall, 1050 Bascom Mall, Madison, WI, 53706, USA

    David Ohls

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Correspondence to Mark S. Copelovitch.

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Copelovitch, M.S., Ohls, D. Trade, institutions, and the timing of GATT/WTO accession in post-colonial states. Rev Int Organ 7, 81–107 (2012). https://doi.org/10.1007/s11558-011-9129-2

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