Mar 2 (W): 14. Why do countries form international trade agreements? Example: the World Trade Organization, and USMCA. Reciprocity, nondiscrimination, and the institutional functions of the WTO.

HKM PIPE, 71-83, 92-102, HKM PIPE 71-83, 92-102.pdf
Meredith A. Crowley, “An Introduction to the WTO and GATT,” Economic Perspectives (2003), 42-57, Crowley.pdf
Kyle Handley and Nuno Limao, “Does Policy Uncertainty Reduce Economic Activity? Insights and Evidence from Large Trade Reforms,” VoxEU (Nov 2013), Handley-Limao.pdf
Jen Kirby, “USMCA, the New Trade Deal Between the US, Canada, and Mexico, Explained,” Vox [blog] (Oct 2, 2018), Kirby.pdf

Slides: Session 14 ~ Trade Agreements.pptx

Class Recording: Session 14 Recording (Mar 2)

Discussion Thread: Discussion Thread for Sessions 14-15

Objectives

To explain the institutional theory of the core functions of multilateral trade institutions - reciprocity, nondiscrimination, dispute settlement
To explain the theoretical basis for viewing the strategic interaction among states on trade as a Prisoner's Dilemma
To describe key features of the World Trade Organization (WTO) institution and its operations
To evaluate the institutionalist arguments using evidence from WTO members' trade policies

Concepts

reciprocity
nondiscrimination, "most favored nation" (MFN) status, and "national treatment"
dispute settlement
regional trade agreement (RTA) or preferential trade agreement (PTA)

Discussion Questions

Two of the core principles underpinning the WTO institution are reciprocity and nondiscrimination. How are those principles manifested in the WTO institution? What functions do these principles serve, as per the Crowley reading's argument? Why, in particular, is the MFN principle necessary?
How would we know if the WTO institution has an influence in inducing states to pursue freer trade policies? What kind of evidence would be necessary to draw this conclusion? What conclusion does the available evidence point to, in this regard?
To put it another way, why do states join the WTO? Does doing so induce them to commit to and maintain lower trade barriers?
Why do states join regional or preferential trade agreements? What benefits do those provide for WTO members, in particular?
One function an institution like the WTO can perform is making the policy environment more transparent and therefore more predictable for private actors (Handley and Limao, and HKM PIPE, p. 96). Does the WTO have this effect, and what influence might that have, if so, on the behavior of private market actors?