Agree to Disagree: The Spillover of Trade Policy into United Nations General Assembly Voting

Transcription

1 UNCTAD Research Paper No. 28 UNCTAD/SER.RP/2018/10 Maria V. Sokolova (DITC/UNCTAD) and Alisa DiCaprio (R3) Agree to Disagree: The Spillover of Trade Policy into United Nations General Assembly Voting Abstract Cooperation among nations is most often negotiated or imposed. The impact on commercial policy is direct, but does it affect other policy decisions? We know trade agreement implementation results in higher bilateral trade and other positive economic results for both countries. It might also be expected to have impacts on each country s economic policies with non-member countries. But we show that there is one further step: common trade policy spills over into voting convergence in the United Nations General Assembly. Using a pairwise approach, we show that signing an RTA introduces voting synchronization between member countries. RTA membership increases overall agreement by 4 percent, agreement by 1 to 2 percent, and disagreement by 3 to 5 percent, with deeper forms of RTAs leading to higher synchronization. This suggests that the benefits of trade agreements are understated in the literature that only measures economic impact. Key words: regional trade agreements, foreign policy, united nations general assembly, regional integration, voting

2 Contents Acknowledgements The authors are thankful to the participants of UNCTAD Research Seminar Series (Geneva, June 2018) and Brown Bag Seminar Series of The Graduate Institute, Geneva (Geneva, March 2018) for useful comments and suggestions on the idea before the paper even existed. We thank Lucas Assuncao and Bonapas Onguglo for their support and supervision; Carlos Razo, Graham Mott, Julia Barbara Seiermann and Mesut Saygili for their extremely helpful feedback; Munkh-Erdene Batkhishig for research assistance. Any remaining errors are the authors.

3 Introduction 1

4 1. High versus Low foreign policy 2 The Politics of Political Cooperation The Politics of Trade Cooperation 2 The White House Briefing Room Archives United States and Jordan Sign Historic Free Trade Agreement for the text of agreement; analysis of the Jordanian policies change in labour and environment laws can be found in New York Times article: 3 Imposed in this context refers to unilateral concessions being one-sided and hence not involving negotiation effort from the other side as in case of, for example, Free Trade Agreements.

5 2. Data Voting Data 4 4 For example, the European Union (Luif,2003; Hoesli, van Kampen, Meijerink and Tennis, 2010; Young and Rees, 2005), group of 77 (Iida, 1988) or African countries (Meyers, 1966) 5 For example European Union votes on human rights issues (Smith, 2006)

6 6 Trade and Regional Data 8 Voting Similarity Index 6 Such methodology is common, see Voeten (2000), Birnberg (2009). 7 Voeten (2000) also used such approach. 8 Among many Frankel et al. (1996), Freund and Ornelas (2010), Steiger and Bagwell (1999) and Vicard (2009) 9 Available at 10 For the full information on the classification regard Bergstrand, Baier and Clance (2017)

7 j i SI i,j v = [1 V j v v = V i v ] v (vi v j ) V v v (vi v j ) V v i j V v j = {Y v i, N v i, A v i } SI v i,j = 1 SI i,j v = [0, 1] SI i,j v = 0 i, j i, j SI A i,j i, j SI Y i,j SI N i,j SI v i,j = = = 0.78 SI Y i,j = 57 = 0.5 SI 115 N i,j = 10 = 0.09 SI 115 A i,j = 23 = The FTA between Estonia and European Union came in effect in 1998, European Union -Hungary in 1992, European Union -Slovenia in 1997.

8 3. Methodology SI v,t i,j = β 0 RTA v ij,t + FE ij + FE it + FE jt + FE t + ε ij,t FE it and FE jt FE t FE ij β 0 Age_RTA ij,t 12 To our knowledge we are the first ones to apply it in the context of the UNGA voting.

9 Import ij,t Export ij,t Tr_share ij,t GDPdistance ij,t ij t Age_RTA ij,t Tr_share ij,t GDPdistance ij,t 4. Results TrShare ij,t 13 For more, see Wooldridge (2010) Econometric Analysis of Cross Section and Panel Data, 2nd ed., chapter 18. Or (2010) A. Colin Cameron and Pravin K. Trivedi Microeconomics Using Stata, revised edition, chapter

10 TrShare ij,t 14 Eliminating EU17 does not affect the main results, but does not eliminate the TrShare ij,t significance that is caused by the United States position in UNGA. 15 Results by the type of vote are available on demand.

11 Robustness SI i,j v = = 0.54 SI 115 N i,j = = = 95.5 = 0.83 SI 115 Y i,j = = 115 = 0.10 SI 115 A i,j = = = 11 SI A i,j TrShare Endogeneity 16 The results on these additional checks are available upon request. The determinants of RTAs that lead to more or less synchronization in UNGA voting is a subject of a companion paper.

12 RTA ij,t 1 RTA ij,t+4 Reg1 i,t = l j (trade il,t D(1 RTA il,t = 1) jt Trade il,t i j ij i j 17 Some of the robustness checks look into the regional breakdown (as same region of the country pair, or South-South cooperation) but further research on the drivers of this synchronization is encouraged.

13 5. Conclusions

14 Bibliography

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16 Number of Resolutions Voted Resolutions All Resolutions 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Colonisation Economic Human Rights Nuclear weapons Ocean UN Operation State of Palestine Peace Disarmament

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18 Share of RTA relationships (left) Trade under RTA (1990=1) (right)

19 RTA=1 RTA=0 Table 1: Types of Regional Trade Agreements (following Bertrand & Bayer database) Type of Agreement Definition NA No Agreement No preferential trade agreement NR_PTA Non Reciprocal Preferential Trade Agreement Preferential terms and customs concessions given by developed nations to developing countries PTA Preferential Trade Agreement Preferential terms to members vs. nonmembers FTA Free Trade Agreement Trade barriers eliminated (or substantially so) among members; treat non-members differently CU Customs Union Same as FTA; but treat non-members the same CM EUN Common Market Economic Union Same as CU; but also includes free movement of labour/capital Same as CM, but also monetary and Fiscal Policy coordination; further harmonization of taxes/regulation/monetary systems

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35 FTA Customs Union Common Market Economic Union Overall Agree Disagree Abstain

36 Table 2: Main results - overall similarity and by the type of votes (1) (2) (3) (4) (5) (6) (7) (8) Overall Agree Disagree Abstain Overall Agree Disagree Abstain RTA ij,t 0.02*** 0.01*** 0.05*** 0.10*** 0.04*** 0.02*** 0.03** 0.10*** (0.00) (0.00) (0.01) (0.01) (0.01) (0.00) (0.01) (0.01) AgeRTA ij,t 0.00*** 0.00*** *** lnimports ij,t 0.00* *** lnexports ij,t 0.00** 0.00* 0.00* 0.00*** TrShare ij,t ** -2.24*** (0.32) (0.12) (0.87) (0.68) GDPdist ij,t ** -0.02*** Exp-Year YES YES YES YES YES YES YES YES Imp-Year YES YES YES YES YES YES YES YES Exp-Imp YES YES YES YES YES YES YES YES Observations 793, , , , , ,749 85, ,966 Controls NO NO NO NO YES YES YES YES R-squared Note: RTA stands for regional trade agreement (as Free Trade Agrrement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1 Table 3: Results with the USA excluded (1) (2) (3) (4) (5) (6) (7) (8) VARIABLES Overall Agree Disagree Abstain Overall Agree Disagree Abstain RTA ij,t 0.02*** 0.01*** 0.04*** 0.10*** 0.04*** 0.02*** 0.03** 0.10*** (0.00) (0.00) (0.01) (0.01) (0.00) (0.00) (0.01) (0.01) lnimports ij,t *** lnexports ij,t 0.00* 0.00* *** TrShare ij,t *** (0.15) (0.09) (0.57) (0.64) AgeRTA ij,t 0.00*** 0.00*** *** GDPdist ij,t ** Exp-Year FE YES YES YES YES YES YES YES YES Imp-Year FE YES YES YES YES YES YES YES YES Exp-Imp FE YES YES YES YES YES YES YES YES 698,81 Observations 784, , , , ,278 83, ,946 R-squared

37 Note: RTA stands for regional trade agreement (as Free Trade Agreement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1 Table 4.1 Alternative RTA definition: Deeper RTAs (1) (2) (3) (4) Overall Agree Disagree Abstain RTA deeper ij,t 0.07*** 0.04*** 0.07*** 0.15*** (0.00) (0.00) (0.01) (0.01) Exp-Year FE YES YES YES YES Imp-Year FE YES YES YES YES Exp-Imp FE YES YES YES YES Observations 793, , , ,262 Controls NO NO NO NO R-squared Note: RTA stands for regional trade agreement (as Free Trade Agrrement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1 Table 4.2 Alternative RTA definition: Shallower RTAs (1) (2) (3) (4) Overall Agree Disagree Abstain RTA shallower ij,t -0.01*** -0.00*** 0.04*** 0.00 (0.00) (0.00) (0.01) (0.01) Exp-Year FE YES YES YES YES Imp-Year FE YES YES YES YES Exp-Imp FE YES YES YES YES Observations 793, , , ,262 Controls NO NO NO NO R-squared Note: RTA stands for regional trade agreement (as Free Trade Agrrement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1

38 Table 5: Heterogeneity of RTA agreements (1) (2) (3) (4) (5) (6) (7) (8) Overall Agree Disagree Abstain Overall Agree Disagree Abstain FTA ij,t 0.01*** 0.00*** 0.04*** 0.08*** 0.03*** 0.01*** 0.03*** 0.08*** (0.00) (0.00) (0.01) (0.01) (0.01) (0.00) (0.01) (0.12) CustomsUnion ij,t 0.08*** 0.04*** 0.10*** 0.16*** 0.08*** 0.04*** 0.09*** 0.12*** (0.00) (0.00) (0.01) (0.01) (0.01) (0.01) (0.02) (0.02) CommonMarket ij,t 0.07*** 0.04*** 0.11*** 0.21*** 0.07*** 0.04** 0.09*** 0.19*** (0.00) (0.00) (0.01) (0.01) (0.01) (0.00) (0.02) (0.02) EconomicUnion ij,t 0.09*** 0.05*** 0.13*** 0.26*** 0.11*** 0.06*** 0.10*** 0.25*** (0.01) (0.00) (0.02) (0.01) (0.01) (0.00) (0.02) (0.02) AgeRTA ij,t 0.00*** *** 0.00*** lnimports ij,t ** lnexports ij,t * 0.00*** TrShare ij,t -0.69** -0.30*** -3.94** -2.79*** (0.34) (0.22) (0.87) (0.70) GDPdist ij,t *** 0.00*** 0.00 Exp-Year FE YES YES YES YES YES YES YES YES Imp-Year FE YES YES YES YES YES YES YES YES Exp-Imp FE YES YES YES YES YES YES YES YES Observations 793, , , , , ,749 85, ,966 Controls NO NO NO NO YES YES YES YES R-squared Note: RTA classification as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1

39 Overall Similarity Overall Similarity Table 6: Heterogeneity of resolutions (1) (2) (3) (4) (5) (6) (7) (8) (9) Human Palestine Disarmament Nuclear Rights Colonisation Economic Ocean Peace Operational RTA ij,t 0.00* *** 0.09*** -0.04*** -0.05*** *** 0.02*** (0.00) Controls NO NO NO NO NO NO NO NO NO Time FE YES YES YES YES YES YES YES YES YES Country-Pair FE YES YES YES YES YES YES YES YES YES Country-Time FE YES YES YES YES YES YES YES YES YES Observations 742, , , , , , , , ,280 R-squared (1) (2) (3) (4) (5) (6) (7) (8) (9) Human Palestine Disarmament Nuclear Rights Colonisation Economic Ocean Peace Operational - RTA ij,t 0.04*** -0.02*** 0.03*** 0.11*** 0.03*** *** 0.04*** -0.02* (0.00) (0.01) (0.01) (0.02) (0.01) (0.01) (0.01) (0.01) (0.01) Controls YES YES YES YES YES YES YES YES YES Time FE YES YES YES YES YES YES YES YES YES Country-Pair FE YES YES YES YES YES YES YES YES YES Country-Time FE YES YES YES YES YES YES YES YES YES Observations 45,843 46,252 46,405 46,838 45,992 46,913 38,324 44,825 28,453 R-squared Note: RTA stands for regional trade agreement (as Free Trade Agreement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1

40 Table 7: Alternative definition of similarity measure (broader similarity definition) (1) (2) (3) (4) (5) (6) (7) (8) Overall Yes No Abstain Overall Yes No Abstain RTA ij,t 0.02*** 0.01*** 0.05*** 0.05*** 0.34*** 0.02*** 0.04*** 0.00 (0.00) (0.00) (0.01) (0.01) (0.01) (0.00) (0.01) (0.02) AgeRTA ij,t 0.00*** 0.00*** 0.00*** -0.00*** lnimports ij,t 0.00*** 0.00*** * lnexports ij,t 0.00*** 0.00*** 0.00* 0.00 TrShare ij,t -0.52* -0.15* -3.44*** -0.36* (0.27) (0.08) (0.77) (0.97) GDPdist ij,t *** -0.01*** Exp-Year YES YES YES YES YES YES YES YES Imp-Year YES YES YES YES YES YES YES YES Exp-Imp YES YES YES YES YES YES YES YES Observations 793, , , , , , , ,120 R-squared Note: RTA stands for regional trade agreement (as Free Trade Agreement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1 Table 8: Alternative count similarity measure (1) (2) (3) (4) (5) (6) (7) (8) Overall Agree Disagree Abstain Overall Agree Disagree Abstain RTA ij,t 0.02*** 0.01*** 0.05*** 0.10*** 0.04*** 0.02*** 0.04*** 0.10* (0.00) (0.00) (0.01) (0.00) (0.00) (0.00) (0.01) (0.01) AgeRTA ij,t 0.00*** 0.00*** 0.00** -0.00*** lnimports ij,t 0.00* *** lnexports ij,t 0.00** 0.00** *** TrShare ij,t * -1.79*** (0.22) (0.11) (0.93) (0.38) GDPdist ij,t * -0.01** Exp-Year YES YES YES YES YES YES YES YES Imp-Year YES YES YES YES YES YES YES YES Exp-Imp YES YES YES YES YES YES YES YES Observations 793, , , , , ,749 85, ,966 Controls NO NO NO NO YES YES YES YES R-squared

41 Note: RTA stands for regional trade agreement (as Free Trade Agreement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1 Table 9: Countries' GDP differences in RTA (1) (2) (3) (4) (5) (6) (7) (8) Overall Agree Disagree Abstain Overall Agree Disagree Abstain RTA ij,t *** ** 0.01* * 0.09** (0.01) (0.00) (0.02) (0.03) (0.01) (0.00) (0.04) (0.03) RTA GDPdist ij,t 0.00*** 0.00*** 0.01** *** 0.00*** 0.01*** 0.00 GDPdist ij,t -0.00** *** ** lnimports ij,t 0.00* *** lnexports ij,t 0.00** 0.00* *** TrShare ij,t ** -2.24*** (0.32) (0.12) (1.76) (0.68) AgeRTA ij,t 0.00*** 0.00*** *** Exp-Year YES YES YES YES YES YES YES YES Imp-Year YES YES YES YES YES YES YES YES Exp-Imp YES YES YES YES YES YES YES YES Observations 752, , , , , ,749 85, ,966 Controls NO NO NO NO YES YES YES YES R-squared Note: RTA stands for regional trade agreement (as Free Trade Agrrement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1

42 different region same region Table 10: Results within same and different regions (1) (2) (3) (4) (5) (6) (7) (8) VARIABLES Overall Agree Disagree Abstain Overall Agree Disagree Abstain RTA ij,t 0.01*** 0.00*** 0.05*** 0.08*** *** 0.05*** (0.00) (0.00) (0.01) (0.01) (0.00) (0.00) (0.01) (0.02) lnimports ij,t 0.00*** 0.00*** *** lnexports ij,t 0.00*** 0.00*** *** TrShare ij,t -0.35** -0.23** *** (0.18) (0.10) (0.53) (0.73) AgeRTA ij,t *** 0.00 GDPdist ij,t *** -0.00* Exp-Year FE NO NO NO NO YES YES YES YES Imp-Year FE YES YES YES YES YES YES YES YES Exp-Imp FE YES YES YES YES YES YES YES YES Observations 150, ,014 57, ,028 77,435 77,435 41,249 72,284 R-squared (1) (2) (3) (4) (5) (6) (7) (8) Overall Agree Disagree Abstain Overall Agree Disagree Abstain RTA ij,t 0.03*** 0.02*** 0.05*** 0.11*** 0.04*** 0.02*** *** (0.00) (0.00) (0.02) (0.01) (0.00) (0.00) (0.05) (0.03) lnimports ij,t lnexports ij,t TrShare ij,t *** (0.37) (0.22) (3.93) (3.63)

43 AgeRTA ij,t 0.00*** 0.00*** ** GDPdist ij,t *** (0.00) (0.00) (0.01) (0.01) Exp-Year FE YES YES YES YES YES YES YES YES Imp-Year FE YES YES YES YES YES YES YES YES Exp-Imp FE YES YES YES YES YES YES YES YES Observations 643, , , , , ,310 43, ,691 R-squared Note: RTA stands for regional trade agreement (as Free Trade Agrrement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1 Table 11: Regression with leads and lags (1) (2) (3) (4) (5) (6) (7) (8) Overall Agree Disagree Abstain Overall Agree Disagree Abstain RTA ij,t 0.00** 0.00* 0.02*** ** -0.02** (0.00) (0.00) (0.00) (0.01) (0.00) (0.00) (0.00) (0.01) RTA ij,t *** -0.00*** -0.00*** *** (0.00) (0.00) (0.01) (0.01) (0.00) (0.00) (0.01) (0.01) RTA ij,t *** 0.01*** 0.02*** 0.07*** 0.01*** 0.01*** 0.03*** 0.09*** (0.00) (0.00) (0.01) (0.01) (0.00) (0.00) (0.01) (0.01) RTA ij,t ** -0.01*** 0.03*** *** 0.03*** (0.00) (0.00) (0.00) (0.01) (0.00) (0.00) (0.00) (0.01) RTA ij,t *** 0.00*** *** 0.00*** 0.00*** ** (0.00) (0.00) (0.00) (0.01) (0.00) (0.00) (0.00) (0.01) RTA ij,t * -0.00*** * -0.00** -0.00*** *** (0.00) (0.00) (0.00) (0.01) (0.00) (0.00) (0.00) (0.01) RTA ij,t *** 0.01*** 0.04*** 0.05*** 0.01*** 0.01*** 0.04*** 0.04*** (0.00) (0.00) (0.01) (0.01) (0.00) (0.00) (0.01) (0.01) lnimports ij,t 0.00*** 0.00*** ***

44 lnexports ij,t 0.00*** 0.00*** *** TrShare ij,t -1.01*** -0.39*** -4.06** -2.92*** (0.29) (0.11) (1.94) (0.80) GDPdist ij,t *** Controls NO NO NO NO YES YES YES YES Time FE YES YES YES YES YES YES YES YES Country-Pair FE YES YES YES YES YES YES YES YES Country-Time FE YES YES YES YES YES YES YES YES Observations 621, , , , , ,014 93, ,442 R-squared Note: RTA stands for regional trade agreement (as Free Trade Agrrement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1

45 Table 12: Robustness for trend on regionalism (1) (2) (3) (4) Overall Agree Disagree Abstain Reg1 i,t (0.06) (0.03) (0.13) (0.17) Reg1 j,t (0.06) (0.03) (0.13) (0.17) AgeRTA ij,t 0.00*** 0.00*** 0.00** 0.00* lnimports ij,t lnexports ij,t TrShare ij,t 1.60*** 0.51*** 3.13*** 2.58** (0.48) (0.19) (1.02) (1.06) GDPdist ij,t -0.01*** *** -0.01*** Exp-Year FE YES YES YES YES Imp-Year FE YES YES YES YES Exp-Imp FE YES YES YES YES Observations 8,750 8,750 6,858 7,946 Controls YES YES YES YES R-squared Note: RTA stands for regional trade agreement (as Free Trade Agrrement, Customs Union, Common Market or Economic Union) as per Bergstrand dataset. Robust standard errors, clustered at the country-pair level are in in parentheses. *** p<0.01, **p<0.05, *p<0.1