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On the effects of GATT/WTO membership on trade: They are positive and large after all

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  • Larch, Mario
  • Monteiro, José-Antonio
  • Piermartini, Roberta
  • Yotov, Yoto V.

Abstract

We capitalize on the latest developments in the empirical structural gravity literature to revisit the question of whether and how much does GATT/WTO membership affect international trade. We are the first to capture the non-discriminatory nature of GATT/WTO commitments by measuring the effects of GATT/WTO membership on international trade relative to domestic sales. These unilateral effects of GATT/WTO membership are found to be large, positive, and statistically significant. We also obtain bilateral GATT/WTO estimates, which are larger than those reported in the literature. In particular, our results imply that, on average, joining GATT and/or WTO has increased trade between members by 171% and trade between member and non-member countries by about 88%. We also find that although both GATT/WTO has been effective in promoting trade between members, the WTO has been more effective in promoting trade with non-members than GATT. A battery of sensitivity experiments confirms the effectiveness of our methods and robustness of our main findings.

Suggested Citation

  • Larch, Mario & Monteiro, José-Antonio & Piermartini, Roberta & Yotov, Yoto V., 2019. "On the effects of GATT/WTO membership on trade: They are positive and large after all," WTO Staff Working Papers ERSD-2019-09, World Trade Organization (WTO), Economic Research and Statistics Division.
    • Handle: RePEc:zbw:wtowps:ersd201909
    DOI: 10.30875/7758b713-en
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    More about this item

    Keywords

    GATT/WTO; International Trade; Domestic Sales; Structural Gravity;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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