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Trade policy under the GATT/WTO: empirical evidence of the equal treatment rule

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  • Chad P. Bown

Abstract

. A fundamental difference between multilateral trade agreements like the GATT and WTO and a preferential agreement is the multilateral agreements’ inclusion of a most‐favoured‐nation principle. Though MFN requires that members implement policies that provide equal treatment to all GATT/WTO countries, how far do members actually follow the MFN principle when so required? We empirically investigate a sample of GATT/WTO trade disputes and the effect of successful dispute settlement negotiations on the disputed product trade of third country exporters to the defendant country. We document evidence of trade liberalization consistent with defendant countries successfully applying the equal treatment rule. JEL classification F13 Politique commerciale sous le régime GATT/OMC : résultats empiriques de la règle du traitement équivalent. Une différence fondamentale entre les accords commerciaux multilatéraux comme le GATT ou l’OMC et un accord préférentiel est que dans le premier cas on fait appel au principe de la nation la plus favorisée. Même si ce principe requiert que les membres mettent en place des politiques qui assurent un traitement équivalent à tous les pays de l’accord GATT/OMC, reste à savoir jusqu’à quel point les membres se soumettent à ce principe quand c’est requis. Ce mémoire étudie la question en faisant enquête sur un échantillon de disputes commerciales autour d’accords de type GATT/OMC, et sur l’effet du succès des négociations dans la résolution de conflit sur le commerce du produit au cæur de la dispute en provenance de pays tiers exportant vers le pays qui se défend. On montre que les résultats de la libéralisation du commerce sont consistants avec l’application de la règle du traitement équivalent par les pays qui se défendent.

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  • Chad P. Bown, 2004. "Trade policy under the GATT/WTO: empirical evidence of the equal treatment rule," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(3), pages 678-720, August.
  • Handle: RePEc:wly:canjec:v:37:y:2004:i:3:p:678-720
    DOI: 10.1111/j.0008-4085.2004.00243.x
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    1. Chad P. Bown, 2004. "On the Economic Success of GATT/WTO Dispute Settlement," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 811-823, August.
    2. Kyle Bagwell & Robert W. Staiger, 2001. "The WTO as a Mechanism for Securing Market Access Property Rights: Implications for Global Labor and Environmental Issues," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 69-88, Summer.
    3. Kimberly A. Clausing, 2001. "Trade creation and trade diversion in the Canada - United States Free Trade Agreement," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 677-696, August.
    4. Wilfred J. Ethier, 2004. "Political Externalities, Nondiscrimination, and a Multilateral World," Review of International Economics, Wiley Blackwell, vol. 12(3), pages 303-320, August.
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    6. Bagwell, Kyle & Staiger, Robert W., 2004. "Multilateral trade negotiations, bilateral opportunism and the rules of GATT/WTO," Journal of International Economics, Elsevier, vol. 63(1), pages 1-29, May.
    7. Robert C. Feenstra & Robert E. Lipsey & Harry P. Bowen, 1997. "World Trade Flows, 1970-1992, with Production and Tariff Data," NBER Working Papers 5910, National Bureau of Economic Research, Inc.
    8. 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.
    9. Dan Kovenock & Marie Thursby, 1992. "Gatt, Dispute Settlement And Cooperation," Economics and Politics, Wiley Blackwell, vol. 4(2), pages 151-170, July.
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    1. Kyle Bagwell & Chad P. Bown & Robert W. Staiger, 2016. "Is the WTO Passé?," Journal of Economic Literature, American Economic Association, vol. 54(4), pages 1125-1231, December.
    2. Chad Bown & Kara Reynolds, 2015. "Trade flows and trade disputes," The Review of International Organizations, Springer, vol. 10(2), pages 145-177, June.
    3. Sheldon, Ian M. & Chow, Daniel C.K. & McGuire, William, 2017. "Trade Liberalization and Institutional Constraints on Moves to Protectionism: Multilateralism vs. Regionalism," 2018 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2018, Philadelphia, Pennsylvania 266305, Agricultural and Applied Economics Association.
    4. Kyle Bagwell & Robert W. Staiger, 2013. "Can the Doha Round Be a Development Round? Setting a Place at the Table," NBER Chapters, in: Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century, pages 91-124, National Bureau of Economic Research, Inc.
    5. Kamal Saggi, 2018. "The MFN clause, welfare, and multilateral cooperation between countries of unequal size," World Scientific Book Chapters, in: Kamal Saggi (ed.), Economic Analysis of the Rules and Regulations of the World Trade Organization, chapter 14, pages 312-323, World Scientific Publishing Co. Pte. Ltd..
    6. Shubha Ojha, 2020. "The Rise of Exceptions and the Eclipse of the Elemental Principle of Most-Favoured-Nation," Proceedings of the 18th International RAIS Conference, August 17-18, 2020 017so, Research Association for Interdisciplinary Studies.
    7. Saggi, Kamal & Sengul, Faruk & Yildiz, Halis Murat, 2007. "Sustaining multilateral cooperation among asymmetric countries: Does MFN help?," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 543-562.
    8. McCalman, Phillip, 2010. "Trade policy in a "super size me" world," Journal of International Economics, Elsevier, vol. 81(2), pages 206-218, July.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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