The Design of International Trade Agreements: Introducing a New Dataset

Preferential trade agreements (PTAs) have been proliferating for the last twenty years. A large literature has studied various aspects of this phenomenon. Until recently, however, many large-N studies have paid only scant attention to variation across PTAs in terms of content and design. Our contribution to this literature is a new dataset on the design of trade agreements that is the most comprehensive in terms of both variables coded and agreements covered. We illustrate the dataset’s usefulness in re-visiting the questions if and to what extent PTAs impact trade flows. The analysis shows that on average PTAs increase trade flows, but that this effect is largely driven by deep agreements. In addition, we provide evidence that provisions that tackle behind-the-border regulation matter for trade flows. The dataset’s contribution is not limited to the PTA literature, however. Broader debates on topics such as institutional design and the legalization of international relations will also benefit from the novel data.

Why Do Some International Institutions Contain Strong Dispute Settlement Provisions: New Evidence from Preferential Trade Agreements

To understand why some international institutions have stronger dispute settlement mechanisms (DSMs) than others, we investigate the dispute settlement provisions of nearly 600 preferential trade agreements (PTAs), which possess several desirable case-selection features and are evoked more than is realized. We broaden the study of dispute settlement design beyond “legalization” and instead reorient theorizing around a multi-faceted conceptualization of the strength of DSMs. We posit that strong DSMs are first and foremost a rational response to features of agreements that require stronger dispute settlement, such as depth and large memberships. Multivariate empirical tests using a new data set on PTA design confirm these expectations and reveal that depth – the amount of policy change specified in an agreement – is the most powerful and consistent predictor of DSM strength, providing empirical support to a long-posited but controversial conjecture. Yet power also plays a sizeable role, since agreements among asymmetric members are more likely to have strong DSMs due to their mutual appeal, as are those involving the United States. Important regional differences also emerge, as PTAs across the Americas are designed with strong dispute settlement, as are Asian PTAs, which contradicts the conventional wisdom about Asian values and legalization. Our findings demonstrate that rationalism explains much of international institutional design, yet it can be enhanced by also incorporating power-based and regional explanations.