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Do Trade Flows Respond to Nudges? Evidence from the WTO’s Trade Policy Review Mechanism

Listed author(s):
  • David J. Kuenzel

    (Economics Department, Wesleyan University)

The institutional underpinnings and trade effects of the WTO have been extensively scrutinized in the literature. There is, however, relatively little known about the economic effects of members’ communications outside of official negotiations and dispute proceedings. One of the WTO’s core missions is to ensure and further transparency of its members’ trade policies through regular reviews by its Trade Policy Review Mechanism (TPRM). This paper considers whether communications between members through the TPRM lead to subsequent changes in bilateral trade flows. To examine this question, I construct a detailed dataset on submitted trade policy concerns during TPRM proceedings going back to 1989. The results indicate substantial heterogeneity in the trade effects of submitted trade policy concerns. Positive trade responses are more likely to occur when (i) the receiver of the concern has less market power, (ii) the submitter is more willing to engage in WTO disputes with the reviewed member to challenge controversial trade policies, and (iii) few concerns have been communicated to the importing country before.

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File URL: http://repec.wesleyan.edu/pdf/dkuenzel/2017006_kuenzel.pdf
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Paper provided by Wesleyan University, Department of Economics in its series Wesleyan Economics Working Papers with number 2017-006.

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Length: 33 pages
Date of creation: Oct 2017
Handle: RePEc:wes:weswpa:2017-006
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Web page: http://www.wesleyan.edu/econ/

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  1. Henrik Horn & Petros C. Mavroidis & André Sapir, 2010. "Beyond the WTO? An Anatomy of EU and US Preferential Trade Agreements," The World Economy, Wiley Blackwell, vol. 33(11), pages 1565-1588, November.
  2. Giovanni Maggi & Andrés Rodríguez-Clare, 2007. "A Political-Economy Theory of Trade Agreements," American Economic Review, American Economic Association, vol. 97(4), pages 1374-1406, September.
  3. Tristan Kohl & Steven Brakman & Harry Garretsen, 2016. "Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements," The World Economy, Wiley Blackwell, vol. 39(1), pages 97-131, January.
  4. Christian Volpe Martincus & Antoni Estevadeordal & Andrés Gallo & Jessica Luna, 2010. "Information Barriers, Export Promotion Institutions, and the Extensive Margin of Trade," IDB Publications (Working Papers) 3185, Inter-American Development Bank.
  5. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
  6. Ghosh, Sucharita & Yamarik, Steven, 2004. "Are regional trading arrangements trade creating?: An application of extreme bounds analysis," Journal of International Economics, Elsevier, vol. 63(2), pages 369-395, July.
  7. Christian Volpe Martincus & Antoni Estevadeordal & Andrés Gallo & Jessica Luna, 2010. "Information Barriers, Export Promotion Institutions, and the Extensive Margin of Trade," IDB Publications (Working Papers) 39358, Inter-American Development Bank.
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