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Trade Flows and Trade Disputes

Author

Listed:
  • Kara M. Reynolds
  • Chad P. Bown

Abstract

This paper introduces a new data set and establishes a set of basic facts and patterns regarding the 'trade' that countries fight about under WTO dispute settlement. It characterizes the scope of products, as well as the levels of and changes to the trade values, market shares, volumes, and prices for those goods that eventually become subject to WTO litigation. The first result is striking heterogeneity in the level of market access at stake across disputes: e.g., 14 percent of cases over disputed import products feature bilateral trade that is less than $1 million per year, and another 15 percent feature bilateral trade that is more than $1 billion per year. Nevertheless, some strong patterns emerge from a more detailed examination of the data. Both high- and low-income complainants tend to suffer important losses in foreign market access in the products that ultimately become subject to dispute. Furthermore, while the respondent's imposition of an allegedly WTO-inconsistent policy is associated with reductions, on average, to trade values, volumes and exporter-received prices, there is some evidence of differences in the size of these changes across both the different types of policies under dispute and the potential exporter country litigants. Finally, these different types of policies under dispute can have dissimilar trade effects for the complainant relative to other (non-complainant) exporters of the disputed product, and this is likely to affect the litigation allegiance of third countries.

Suggested Citation

  • Kara M. Reynolds & Chad P. Bown, 2014. "Trade Flows and Trade Disputes," Working Papers 2014-05, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:2014-05
    as

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    File URL: https://drive.google.com/open?id=1EbJYEJbsHdWshcXRqg7iF9TgG0rNUobw
    File Function: First version, 2014
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    References listed on IDEAS

    as
    1. Chad Bown & Rachel McCulloch, 2010. "Developing countries, dispute settlement, and the Advisory Centre on WTO Law," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 19(1), pages 33-63.
    2. Chad P. Bown, 2005. "Trade Remedies and World Trade Organization Dispute Settlement: Why Are So Few Challenged?," The Journal of Legal Studies, University of Chicago Press, vol. 34(2), pages 515-555, June.
    3. Chad P. Bown & Meredith A. Crowley, 2013. "Self-Enforcing Trade Agreements: Evidence from Time-Varying Trade Policy," American Economic Review, American Economic Association, vol. 103(2), pages 1071-1090, April.
    4. Amit Khandelwal, 2010. "The Long and Short (of) Quality Ladders," Review of Economic Studies, Oxford University Press, vol. 77(4), pages 1450-1476.
    5. Andrew T. Guzman & Beth A. Simmons, 2005. "Power Plays and Capacity Constraints: The Selection of Defendants in World Trade Organization Disputes," The Journal of Legal Studies, University of Chicago Press, vol. 34(2), pages 557-598, June.
    6. Kyle Bagwell & Robert W. Staiger, 2011. "What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization," American Economic Review, American Economic Association, pages 1238-1273.
    7. Brian D. Kelly, 2010. "Antidumping Investigations and the Pass-Through of Antidumping Duties and Exchange Rates: Comment," American Economic Review, American Economic Association, vol. 100(3), pages 1280-1282, June.
    8. Rodney D. Ludema & Anna Maria Mayda, 2013. "Do terms-of-trade effects matter for trade agreements? Theory and evidence from WTO Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 128(4), pages 1837-1893.
    9. repec:aea:aejmic:v:9:y:2017:i:2:p:149-87 is not listed on IDEAS
    10. Bruce A. Blonigen & Stephen E. Haynes, 2010. "Antidumping Investigations and the Pass-Through of Antidumping Duties and Exchange Rates: Reply," American Economic Review, American Economic Association, vol. 100(3), pages 1283-1284, June.
    11. Horn, Henrik & Mavroidis, Petros C., 2001. "Economic and legal aspects of the Most-Favored-Nation clause," European Journal of Political Economy, Elsevier, vol. 17(2), pages 233-279, June.
    12. Jee-Hyeong Park, 2011. "Enforcing International Trade Agreements with Imperfect Private Monitoring," Review of Economic Studies, Oxford University Press, vol. 78(3), pages 1102-1134.
    13. Kara M. Reynolds, 2007. "Why Are So Many WTO Disputes Abandoned?," Working Papers 2007-05, American University, Department of Economics.
    14. Beshkar, Mostafa, 2010. "Optimal remedies in international trade agreements," European Economic Review, Elsevier, vol. 54(3), pages 455-466, April.
    15. Chad P. Bown & Bernard M. Hoekman, 2005. "WTO Dispute Settlement and the Missing Developing Country Cases: Engaging the Private Sector," Journal of International Economic Law, Oxford University Press, vol. 8(4), pages 861-890, December.
    16. Bown, Chad P., 2004. "Trade disputes and the implementation of protection under the GATT: an empirical assessment," Journal of International Economics, Elsevier, pages 263-294.
    17. Beshkar, Mostafa, 2010. "Trade skirmishes safeguards: A theory of the WTO dispute settlement process," Journal of International Economics, Elsevier, pages 35-48.
    18. Robert W. Staiger & Alan O. Sykes, 2017. "How Important Can the Non-violation Clause Be for the GATT/WTO?," American Economic Journal: Microeconomics, American Economic Association, vol. 9(2), pages 149-187, May.
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    Cited by:

    1. Chad Bown & Kara Reynolds, 2015. "Trade flows and trade disputes," The Review of International Organizations, Springer, pages 145-177.
    2. Moonhawk Kim, 2016. "Enduring trade disputes: Disguised protectionism and duration and recurrence of international trade disputes," The Review of International Organizations, Springer, vol. 11(3), pages 283-310, September.

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