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Suspiciously Timed Trade Disputes

Author

Listed:
  • Kirchsteiger, Georg
  • Zanardi, Maurizio
  • Conconi, Paola
  • DeRemer, David
  • Trimarchi, Lorenzo
Abstract
This paper shows that electoral incentives affect the occurrence of trade disputes. Focusing on WTO disputes filed by the United States during the 1995-2012 period, we show that U.S. presidents are more likely to initiate a dispute in the year preceding their re-election date. Moreover, disputes filed by the U.S. tend to target industries that are important to swing states in the presidential election. To explain these regularities, we develop a theoretical model in which an incumbent can file a trade dispute to appeal to voters motivated by reciprocity. The incumbent?s ability to initiate a dispute during the re-election campaign provides an advantage over the challenger, who cannot commit to file the dispute if elected. If voters? ideological preferences are not too strong in favor of either candidate, the incumbent will file a trade dispute to increase his re-election chances.

Suggested Citation

  • Kirchsteiger, Georg & Zanardi, Maurizio & Conconi, Paola & DeRemer, David & Trimarchi, Lorenzo, 2015. "Suspiciously Timed Trade Disputes," CEPR Discussion Papers 10582, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10582
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    Full references (including those not matched with items on IDEAS)

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    1. Chad Brown & Paola Conconi & Aksel Erbahar & Lorenzo Trimarchi, 2020. "Trade Protection Along Supply Chains," Working Papers ECARES 2020-52, ULB -- Universite Libre de Bruxelles.
    2. Rotunno, Lorenzo, 2016. "Political stability and trade agreements: Evidence for ‘endgame FTAs’," European Journal of Political Economy, Elsevier, vol. 45(C), pages 133-148.
    3. Lorenzo Trimarchi, 2020. "Trade Policy and the China Syndrome," Working Papers ECARES 2020-15, ULB -- Universite Libre de Bruxelles.
    4. Arevik Gnutzmann-Mkrtchyan & Hoffstadt, 2020. "Use and Abuse of Antidumping by Global Cartels," CESifo Working Paper Series 8729, CESifo.
    5. Aquilante, Tommaso, 2018. "Undeflected pressure? The protectionist effect of political partisanship on US antidumping policy," European Journal of Political Economy, Elsevier, vol. 55(C), pages 455-470.
    6. Lu, Yi & Tao, Zhigang & Zhang, Yan, 2018. "How do exporters adjust export product scope and product mix to react to antidumping?," China Economic Review, Elsevier, vol. 51(C), pages 20-41.
    7. Liebman, Benjamin H. & Reynolds, Kara M., 2022. "Casualties of trade wars," European Economic Review, Elsevier, vol. 148(C).
    8. Pierpaolo Battigalli & Martin Dufwenberg, 2022. "Belief-Dependent Motivations and Psychological Game Theory," Journal of Economic Literature, American Economic Association, vol. 60(3), pages 833-882, September.
    9. Taipeng Li & Lorenzo Trimarchi & Guohao Yang & Rui Xie, 2023. "The Unintended Consequences of Trade Protection on the Environment," DeFiPP Working Papers 2303, University of Namur, Development Finance and Public Policies.
    10. Chen, Xiangyu & Tongurai, Jittima, 2023. "Informational linkage and price discovery between China's futures and spot markets: Evidence from the US–China trade dispute," Global Finance Journal, Elsevier, vol. 55(C).
    11. Kuenzel, David J., 2017. "WTO dispute determinants," European Economic Review, Elsevier, vol. 91(C), pages 157-179.
    12. Dufwenberg, Martin & Kirchsteiger, Georg, 2019. "Modelling kindness," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 228-234.
    13. Maggi, Giovanni & Staiger, Robert W., 2020. "Learning by ruling and trade disputes," Journal of International Economics, Elsevier, vol. 126(C).
    14. Leonardi, Marco & Meschi, Elena, 2021. "Do Non-tariff Barriers to Trade Save American Jobs and Wages?," IZA Discussion Papers 14162, Institute of Labor Economics (IZA).
    15. Antonis Adam & Maxime Menuet & Petros G. Sekeris, 2024. "Conflict under the shadow of elections," Public Choice, Springer, vol. 200(1), pages 173-199, July.
    16. Akihiko Kawaura & Yasutomo Kimura & Yuzu Uchida, 2024. "Deeds, not words? Speech and re-election of Japan’s local legislators," Constitutional Political Economy, Springer, vol. 35(1), pages 123-140, March.

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    More about this item

    Keywords

    Elections; Reciprocity; Trade disputes;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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