POLI 12 Lecture Notes - Lecture 14: World Trade Organization
Lecture 14:
Collective Action Problems:
• Costs of barriers diffuse across consumers, can bee small at individual level.
• Benefits are concentrated for import competing industries
• Lobbying advantages present but depend on politics:
1. Democracy vs Autocracy, democratic leaders want to be reelected and the voters could
potentially swing voters. Autocracies
2. Federalism, locally concentrated interests can carry more weight
Strategic Interaction:
• Design trade policies in anticipation of other players’ actions
• If you liberalize your trade tariffs but other cheat, by subsidizing their exports, your workers could
be hurt
• Cooperation would bee ideal but its difficult for countries to credibly signal that they will
reciprocate
Overcoming Cooperation Problems:
• Small numbers make compliance easier to monitor, you get a hegemonic stability.
• Repeated interaction, fear of souring future deals
• Trade agreements can:
• Provide terms of cooperation
• Stipulate punishments for defection
• Increase information sharing
• Lengthen the shadow of the future
WTO:
• Countries must report any trade barriers they enact
• Panels of experts to define cheating
• Tribunal imposes sanctions on states that cheat
• But WTO effectively reflects preferences of powerful states
The US and Europe protect agriculture, blocking negotiations due to lobbying and the effects of
voting
find more resources at oneclass.com
find more resources at oneclass.com
