The Politics of Trade Agreement Design: Depth, Scope and Flexibility

Transcription

1 The Politics of Trade Agreement Design: Depth, Scope and Flexibility L. Baccini, A. Dür, M. Elsig, K. Milewicz Princeton, Salzburg, Bern, Oxford IPES Annual Conference - November 11, 2011

2 Research Question What explains variation across trade agreements in terms of their design? We focus on: 1. flexibility 2. depth 3. scope

3 Answers External determinants of lobbying depending on the degree to which trade relations are shaped by intra-industry trade (IIT) and intra-firm trade (IFT); Endogenous determinants of lobbying decisions on the degree of flexibility of PTAs and on the extent of their depth and scope are taken simultaneously;

4 Assumptions Conflicting interests between exporters (E) and import-competing industries (IC) flexibility: E ; IC depth: E ; IC scope: E ; IC Governments want to keep their office satisfying all sides in a policy debate including or excluding certain provisions from trade agreements

5 Exogenous Determinants of Lobbying High IIT and IFT: low distributional concerns faced by domestic producers less incentive to lobby from import-competing industries more rigid, broader, and deeper PTAs Example: Canada-US PTA vs. NAFTA

6 Endogenous Determinants of Lobbying Deep and broad PTAs: high adjustment costs more incentive to lobby from import-competing industries more flexible PTAs Example: KOREU PTA and CARICOM

7 Hypotheses 1. As the level of IIT between two countries increases, the degree of flexibility in a PTA decreases. 2. As the level of IIT between two countries increases, so does the depth and the scope of a PTA. 3. As the depth and the scope of a PTA increases, so does its degree of flexibility.

8 Model and Case Selection Findings Model 1 We estimate the following three-equation models: Depth ij = α 1 +β 1 IIT ij +β 2 Flex ij +β 3 Scope ij +β 4 X ij +β 5 Z 1,ij +ɛ 1. Scope ij = α 2 +β 6 IIT ij +β 7 Depth ij +β 8 Flex ij +β 9 X ij +β 10 Z 2,ij +ɛ 2. Flex ij = α 3 +β 11 IIT ij +β 12 Depth ij +β 13 Scope ij +β 14 X ij +β 15 Z 3,ij +ɛ 3.

9 Model and Case Selection Findings Model 2 FDI Depth ij = α 4 +γ 1 +γ 2 Flex ij +γ 3 Scope ij +γ 4 X ij +γ 5 Z 1,ij +ɛ 4. GDP ij FDI Scope ij = α 5 +γ 6 +γ 7 Depth ij +γ 8 Flex ij +γ 9 X ij +γ 10 Z 2,ij +ɛ 5. GDP ij FDI Flex ij = α 6 +γ 11 +γ 12 Depth ij +γ 13 Scope ij +γ 14 X ij +γ 15 Z 3,ij +ɛ 6. GDP ij

10 Model and Case Selection Findings Data on Design Flexibility I: escape clauses + AD provision + subsidies Flexibility II: speed of tariffs liberalization Depth: 52 variables; factor analysis to reduce correlation among these variables Scope: tariffs, services, investments, IPRs, public procurement, technical barriers to trade, and sanitary and phytosanitary measures

11 Model and Case Selection Findings Flexibility II vs. Depth - Bilateral Agreements

12 Model and Case Selection Findings Results for the IG Variables Explanatory Variables DVs IIT IFT FlexibilityI -* -* FlexibilityII -* - Depth +* +* Scope - - Table: * p<0.1

13 Model and Case Selection Findings Results for the Design Variables Explanatory Variables DVs FlexibilityI FlexibilityII Depth Scope FlexibilityI +* -* FlexibilityII +* - Depth +* +* +* Scope +* - + Table: * p<0.05

14 Model and Case Selection Findings Robustness Checks Matching Endogeneity

15 What countries trade matters Dimensions of the design of PTAs are fundamentally interdependent PTAs are very different one another

16 Many thanks for your attention!

17 FlexibilityII vs. Depth - Bilateral Agreements

18 Control Variables Previous Design variables, Design Diffusion variables, Members Distance, GDP, GDPpc, GDP Growth, Trade Regime, Democratization, Veto Players, WTO

19 Hypotheses - Indirect Effects Trade-off between shallow-narrow-rigid PTA and broad-deep-flexible PTA via IIT/IFT IIT/IFT has a positive indirect effect on flexibility IIT/IFT has a negative indirect effect on depth and scope

20 Indirect Effects IIT and IFT have a positive indirect effect on flexibility IIT and IFT have a negative indirect effect on depth

21 List of Bilateral PTAs with High IIT Low Flex & Low Depth Afghanistan-India Albania-Bulgaria Bosnia-Croatia Croatia-Moldova Czech Republic-Estonia Bulgaria-Lithuania Hungary-Latvia Slovakia-Turkey High Flex & High Depth Australia-US Chile-Peru Chile-US Colombia-US Japan-Malaysia Peru-Singapore Peru-US Singapore-US

22 Previous and Current Studies Flexibility: Rosendorff and Milner (2001); Koremenos (2005); Kucik (2011) Design: KLS (2001); Haftel (2011); Johns (2011) IIT: Manger (2011); Peterson and Thies (2011)

23 Case Selection Unit of analysis: up to 1, 913 indirected dyads with IIT Unit of analysis: up to 7, 542 directed dyads with FDI GDP 167 countries (EU single actor) 357 PTAs ( ) SEM model