Working Papers

International Institutional Redundancy: Why Create Multiple Forums for Dispute Settlement?

Abstract

Why do governments expend resources to write down laws that they expect not to invoke? Using data on all bilateral preferential trade agreements (PTAs) signed between 1991 and 2019, I analyze dispute settlement provisions and argue that the parties regularly created rules to adjudicate problems that were never invoked. Instead, parties to the agreement turned to the World Trade Organization (WTO) to adjudicate disputes. I argue that this disjuncture reflects the underlying politics of signing and adhering to bilateral trade agreements. To assure passage, states are responsive to powerful firms and thus explicate a process they support. However, post passage, the weaker government in the dyad has less of an incentive to use the law, believing that they have a greater chance of winning a case at the WTO. Why would firms agree to procedures that are not invoked? In return for going along with the alternative route, firms are able to extract rents from their government in the form of a variety of side payments. This empirical project provides clarification on the requisites of global economic cooperation, via a close look at a case in which governance occurs amid a confluence of competing procedures.

Dispute Settlement in the Liberal International Economic Order

Abstract

The U.S.-led rules-based world order sustained by economic integration, multilateral institutions, and democratic values appeared resilient in the past 70 years. In recent years, however, the liberal international order (LIO) has faced both internal and external challenges. The international system is vulnerable to threats from within its core members, including the rise of populism in wealthy, Western countries. The system also faces challenges from the rise of non-Western powers, like China, that are governed by authoritarian regimes. There has been much scholarly debate whether the challenges imply the collapse of the LIO. In this paper, I examine whether the liberal order has always existed in one form – in a way that makes it possible to discuss whether the system is coming to an end. I explore whether some of the largest members of the liberal order have had similar perceptions of the concepts surrounding the LIO, including the meanings of “liberal” and “order.” Specifically, I examine five countries’ perception of a facet of the LIO – economic integration – that is referred to as the liberal international economic order (LIEO). I examine whether the coexistence of multiple dispute settlement forums has generated conflicting international rules and led countries to disengage from multilateral cooperation at the World Trade Organization (WTO). I collect and analyze the text of over 13,000 government press releases on international trade policies spanning a period of 20 years in five countries. Through an analysis of government rhetoric, I argue that: 1) in the past 20 years, convergence in perceptions of the multilateral trading framework has not occurred, but 2) the liberal values of the WTO have been sustained through the proliferation of regional and preferential trade agreements, most of which contain a dispute settlement forum.

Domestic Legal Institutions and the Settlement of International Trade Disputes

Abstract

What is the role of domestic courts in settling international trade disputes? In most democratic countries, domestic firms actively use litigation to initiate trade-related complaints against the government of a trade partner. This can take two forms. First, firms can directly appeal policies taken by the government of a trade partner to that country's national courts. Second, firms can lobby their government to initiate state-to-state dispute if they feel that a trade agreement is not being utilized as they envisioned. In this paper, I focus on the first approach and ask how and why firms file legal complaints against a foreign government in national courts. It has been argued in the literature that filing a claim in the domestic courts of a foreign country works to the disadvantage of firms because the courts are biased in favor of their own government agencies. Yet empirical data shows that firms actively file claims in a foreign country despite having the option to convince their home government to bring a case before a more neutral international court. I argue that when the functions of domestic and international courts overlap, they can work as complements in deepening countries’ commitment to trade liberalization even when domestic courts are biased in favor of a protectionist government. I test my argument in the context of antidumping (AD) determinations, a policy area in which most international trade disputes occur. I collect data on all AD investigations of U.S. government agencies and court cases filed by foreign firms in the U.S. Court of International Trade between 1985 and 2018. In this ongoing work, I find preliminary evidence that past litigation decreases the likelihood that a protectionist trade policy will be imposed on similar products in the future.

Business as Usual: Why Nationalist Boycotts Do Not Endure (with Jiyoung Ko)

Abstract

With the upsurge of nationalism, states develop new forms of inter-state coercion that exploit the mobilization of nationalist sentiment. In the economic realm, nationalist consumer boycotts have emerged as a modern tool of economic sanction. Existing works on nationalist movements suggest that home governments have incentives to manage and manipulate nationalist sentiment as a tool of coercion. Yet, often times the public decides to end a nationalist boycott and thereby lifts the sanction on an adversary in the absence of explicit government intervention. We argue that “business as usual” returns due to the intervention of non-government actors, mainly targeted firms, that are adversely affected by nationalist boycotts and therefore have incentives to calm a nationalist public. When a nationalist boycott emerges, targeted firms adopt various counter-boycott strategies to diminish the public’s willingness to participate in a boycott. Using experimental data, we test this claim in the context of South Korean citizens’ boycott of Japanese products in the aftermath of a political conflict between the two countries in 2019. We show that respondents’ willingness to boycott Japanese products decreases substantially when firms offer price discounts greater than 30 percent and deliver pro-social messages. By explaining the micro-foundations behind the gradual demise of nationalist boycotts, this study implies that nationalist boycotts do not last long enough to be used as an effective form of economic sanction in international affairs.