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Challenged in Geneva: WTO Litigation Experience and the Design of Preferential Trade Agreements

Published online by Cambridge University Press:  18 February 2021

Simon Wüthrich Open the ORCID record for Simon Wüthrich [Opens in a new window]  and
Manfred Elsig Open the ORCID record for Manfred Elsig [Opens in a new window]
Simon Wüthrich*
Affiliation:
Dr. rer. soc., Deputy Head, Americas Unit, State Secretariat for Economic Affairs (SECO), Non-Resident Fellow, World Trade Institute, University of Bern, Hallerstrasse 6, 3012Bern, Switzerland
Manfred Elsig
Affiliation:
Professor of International Relations, Deputy Managing Director, World Trade Institute, University of Bern, Hallerstrasse 6, 3012Bern, Switzerland
*
*Corresponding author: Simon Wüthrich, email: [email protected]
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Abstract

What explains the design of international institutions? Existing research has largely neglected how experience in cooperation in one set of international institutions impacts on design choices made by states in other globally-oriented institutions. We contribute to this evolving debate by analyzing spillovers in experience in international trade. We argue that countries' track record of interaction in multilateral trade disputes affects the design of their preferential trade agreements (PTAs). If a country participates in a complaint against a prospective PTA partner at the World Trade Organization (WTO), the challenge in Geneva alerts the defendant's import-competing industries with respect to potential challenges under the planned PTA. As a result, these industries exert pressure on their government to preserve leeway under the future treaty, leading to increased flexibility and a lower level of enforcement in the PTA. We find support for our hypotheses in an empirical analysis of 347 PTAs concluded post 1990.

Keywords

international tradeWorld Trade Organization (WTO)preferential trade agreementslitigationinstitutional design
Type
Research Article
Information
Business and Politics , Volume 23 , Issue 3 , September 2021 , pp. 344 - 363
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of V.K. Aggarwal

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Footnotes

†

The corresponding author has prepared this paper exclusively in his personal capacity as a researcher. All the views expressed in this paper are exclusively those of the author and shall not be attributed to the State Secretariat for Economic Affairs as an entity of the Swiss government.

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