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Trade Flows and Trade Disputes

  • Kara M. Reynolds
  • Chad P. Bown
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    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.

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    File Function: First version, 2014
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    Paper provided by American University, Department of Economics in its series Working Papers with number 2014-05.

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    Date of creation: 2014
    Date of revision:
    Handle: RePEc:amu:wpaper:2014-05
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    1. 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, 06.
    2. 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.
    3. Horn, Henrik & Mavroidis, Petros C, 2001. "Economic and Legal Aspects of the Most Favoured Nation Clause," CEPR Discussion Papers 2859, C.E.P.R. Discussion Papers.
    4. Beshkar, Mostafa, 2010. "Trade skirmishes safeguards: A theory of the WTO dispute settlement process," Journal of International Economics, Elsevier, vol. 82(1), pages 35-48, September.
    5. Amit Khandelwal, 2010. "The Long and Short (of) Quality Ladders," Review of Economic Studies, Oxford University Press, vol. 77(4), pages 1450-1476.
    6. Bown, Chad P., 2004. "Trade disputes and the implementation of protection under the GATT: an empirical assessment," Journal of International Economics, Elsevier, vol. 62(2), pages 263-294, March.
    7. Kyle Bagwell & Robert W. Staiger, 2006. "What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization," NBER Working Papers 12727, National Bureau of Economic Research, Inc.
    8. Beshkar, Mostafa, 2010. "Optimal remedies in international trade agreements," European Economic Review, Elsevier, vol. 54(3), pages 455-466, April.
    9. Kara M. Reynolds, 2007. "Why Are So Many WTO Disputes Abandoned?," Working Papers 2007-05, American University, Department of Economics.
    10. 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, 06.
    11. Robert W. Staiger & Alan O. Sykes, 2013. "How Important can the Non-Violation Clause be for the GATT/WTO?," NBER Working Papers 19256, National Bureau of Economic Research, Inc.
    12. Bown, Chad P. & Crowley, Meredith A., 2010. "Self-enforcing trade agreements : evidence from time-varying trade policy," Policy Research Working Paper Series 5223, The World Bank.
    13. 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.
    14. 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 1283-84, June.
    15. 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 1280-82, June.
    16. Peter K. Schott, 2004. "Across-product Versus Within-product Specialization in International Trade," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 646-677, May.
    17. 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.
    18. 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.
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