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A close look at the commitments of World Trade Organization (wto) members presents a striking paradox. Most states could raise their duties significantly before falling afoul of their wto obligations. Moreover, such "binding overhang" varies between countries: some could more than double the amount of trade protection they offer overnight, whereas others are tightly constrained. What accounts for this variation? The author argues that more flexibility is not always better: obtaining it and subsequently using it are both costly. Rather than maximize flexibility, states thus seek an optimal amount. If they have access to policy space through other means, such as currency devaluations and trade remedies, they will exercise restraint in seeking binding overhang. The same supply-side logic holds at the domestic level: governments strategically withhold binding overhang from industries that are able to rely on trade remedies, despite the fact that these tend to have the greatest political clout. (World Politics / SWP)

A close look at the commitments of World Trade Organization (WTO) members presents a striking paradox. Most states could raise their duties significantly before falling afoul of their WTO obligations. Moreover, such "binding overhang" varies between countries: some could more than double the amount of trade protection they offer overnight, whereas others are tightly constrained. What accounts for this variation? The author argues that more flexibility is not always better: obtaining it and subsequently using it are both costly. Rather than maximize flexibility, states thus seek an optimal amount. If they have access to policy space through other means, such as currency devaluations and trade remedies, they will exercise restraint in seeking binding overhang. The same supply-side logic holds at the domestic level: governments strategically withhold binding overhang from industries that are able to rely on trade remedies, despite the fact that these tend to have the greatest political clout.

AbstractThe process by which countries accede to the World Trade Organization (WTO) has become the subject of considerable debate. This article takes a closer look at what determines the concessions the institution requires of an entrant. In other words, who gets a good deal, and who does not? I argue that given the institutional design of accession proceedings and the resulting suspension of reciprocity, accession terms are driven by the domestic export interests of existing members. As a result, relatively greater liberalization will be imposed on those entrants that have more valuable market access to offer upon accession, something that appears to be in opposition to expectations during multilateral trade rounds, where market access functions as a bargaining chit. The empirical evidence supports these assertions. Looking at eighteen recent entrants at the six-digit product level, I find that controlling for a host of country-specific variables, as well as the applied protection rates on a given product prior to accession, the more a country has to offer, the more it is required to give. Moreover, I show how more democratic countries, in spite of their greater overall depth of integration, exhibit greater resistance to adjustment in key industries than do nondemocracies. Finally, I demonstrate that wealth exhibits a curvilinear effect. On the one hand, institutionalized norms lead members to exercise observable restraint vis-à-vis the poorest countries. On the other hand, the richest countries have the greatest bargaining expertise, and thus obtain better terms. The outcome, as I show using a semi-parametric analysis, is that middle-income countries end up with the most stringent terms, and have to make the greatest relative adjustments to their trade regimes.

AbstractThe role of legitimacy in international relations is a topic of much debate, yet there is little understanding of the mechanism behind it. Here I address this discrepancy by asking: are state threats perceived as (il)legitimate more or less likely to be successful? By operationalizing illegitimacy as unilateral action in the presence of a multilateral option, I consider the variation in the success of U.S. trade measures from 1975 to 2000. As I show, the (il)legitimacy of threats modifies the nature of the signal sent by concessions to those threats, and this effect can be measured and predicted. I find that, controlling for material pressure, perceived illegitimacy of U.S. trade threats decreases the likelihood of a target conceding by over 34 percent. Moreover, it pays to resist: targets that resist illegitimate unilateral measures from the United States are 25 percent less likely to encounter similar unilateral measures over the following five years.

The aim of this article is to distinguish between strategies in the Iterated Prisoner's Dilemma on the basis of their relative performance in a given population set. We first define a natural order on such strategies that disregards isolated disturbances, by using the limit of time-average payoffs. This order allows us to consider one strategy as strictly better than another in some population of strategies. We then determine a strategy σ to be ''robust,'' if in any population consisting of copies of two types of strategies, σ itself and some other strategy τ, the strategy σ is never worse than τ. We present a large class of such robust strategies. Strikingly, robustness can accommodate an arbitrary level of generosity, conditional on the strength of subsequent retaliation; and it does not require symmetric retaliation. Taken together, these findings allow us to design strategies that significantly lessen the problem of noise, without forsaking performance. Finally, we show that no strategy exhibits robustness in all population sets of three or more strategy types.

AbstractInternational institutions often moderate the legal decisions they render. World Trade Organization (WTO) panels do this by exercising judicial economy. This practice, which is evident in 41 percent of all rulings, involves the decision not to rule on some of the litigants' arguments. The constraint is that it can be appealed. We argue that panels exercise judicial economy when the wider membership is ambivalent about the future consequences of a broader ruling. This is proxied by the "mixed" (that is, nonpartisan) third-party submissions, which are informative because they are costly, jeopardizing a more decisive legal victory that would benefit these governments too. We empirically test this hypothesis, and find that mixed third-party submissions increase the odds of judicial economy by upwards of 68 percent. This suggests that panels invoke judicial economy to politically appease the wider WTO membership, and not just to gain the litigants' compliance in the case at hand.