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Trade flows and trade disputes

Author

Listed:
  • Bown, Chad P.
  • Reynolds, Kara M.
Abstract
This paper introduces a new data set and establishes a set of basic facts and patterns regarding the trade that countries fight about under World Trade Organization (WTO) dispute settlement. The paper 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: for example, 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, although the respondent's imposition of an allegedly WTO-inconsistent policy is associated with reductions, on average, in trade values, volumes, and exporter-received prices, there is some evidence of differences in the size of these changes across 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.

Suggested Citation

  • Bown, Chad P. & Reynolds, Kara M., 2014. "Trade flows and trade disputes," Policy Research Working Paper Series 6979, The World Bank.
    • Handle: RePEc:wbk:wbrwps:6979
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    References listed on IDEAS

    as
    1. 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, June.
    2. Chad P. Bown & Meredith A. Crowley, 2013. "Self-Enforcing Trade Agreements: Evidence from Time-Varying Trade Policy," American Economic Review, American Economic Association, vol. 103(2), pages 1071-1090, April.
    3. 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, June.
    4. Hiau Looi Kee & Alessandro Nicita & Marcelo Olarreaga, 2008. "Import Demand Elasticities and Trade Distortions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 666-682, November.
    5. 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.
    6. Giovanni Maggi & Robert W. Staiger, 2011. "The Role of Dispute Settlement Procedures in International Trade Agreements," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 475-515.
    7. Chad P. Bown, 2002. "The Economics of Trade Disputes, the GATT’s Article XXIII, and the WTO’s Dispute Settlement Understanding," Economics and Politics, Wiley Blackwell, vol. 14(3), pages 283-323, November.
    8. Henrik Horn, 2006. "National Treatment in the GATT," American Economic Review, American Economic Association, vol. 96(1), pages 394-404, March.
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    11. Amit Khandelwal, 2010. "The Long and Short (of) Quality Ladders," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(4), pages 1450-1476.
    12. Beshkar, Mostafa, 2010. "Optimal remedies in international trade agreements," European Economic Review, Elsevier, vol. 54(3), pages 455-466, April.
    13. Chad Bown & Kara Reynolds, 2015. "Trade flows and trade disputes," The Review of International Organizations, Springer, vol. 10(2), pages 145-177, June.
    14. 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.
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    24. 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.
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    More about this item

    Keywords

    Markets and Market Access; Trade Law; Economic Theory&Research; Free Trade; Emerging Markets;
    All these keywords.

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

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