Working Paper: CEPR ID: DP6459
Authors: Chad P. Bown; Bernard Hoekman
Abstract: Poor countries are rarely challenged in formal WTO trade disputes for failing to live up to commitments, reducing the benefits of their participation in international trade agreements. This paper examines the political-economic causes of the failure to challenge poor countries and discusses the static and dynamic costs and externality implications of this failure. Given the weak incentives to enforce WTO rules and disciplines against small and poor members, bolstering the transparency function of the WTO is important to make trade agreements more relevant to trade constituencies in developing countries. While our focus is on the WTO system, our arguments also apply to reciprocal North-South trade agreements.
Keywords: developing countries; dispute settlement; enforcement; trade agreements; WTO
JEL Codes: F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lack of enforcement of WTO commitments (F13) | reduced economic benefits for developing countries (F63) |
| absence of challenges against poor countries (F35) | diminished welfare economic gains (D69) |
| absence of challenges against poor countries (F35) | reduced incentives for further commitments (D86) |
| weak enforcement of WTO rules (F13) | failure of poor countries to realize full benefits of trade agreements (F13) |
| lack of political will from wealthier nations to challenge poor countries (F64) | exacerbation of enforcement issues (P37) |
| lack of enforcement (P37) | significant welfare costs for consumers in developing countries (F61) |
| absence of enforcement (K40) | disincentives for domestic industries to invest politically in trade liberalization (F13) |
| lack of reciprocal concessions from foreign governments (F13) | limited economic development for developing countries (O54) |