Alliances, Trade Discrimination, and the Global Trade Regime

Abstract

Although nondiscrimination is a central tenet of the global trade regime, discrimination was in fact common under the General Agreement on Tariffs and Trade, particularly against developing countries. The latter have recently sought to end such discrimination through World Trade Organization rules: for example, the Agreement on Textiles and Clothing (ATC) prohibited quota discrimination in this sector. I examine the ATC's impact on US discrimination, asking whether the ATC ended the US policy of favoring allies with generous textile and clothing quotas. I find that, while the United States favored allies before the ATC, this favoritism vanished in the post-ATC period. The ATC thus accomplished its goal of ending explicit textile and clothing discrimination. This result underscores the potential for multilateral rules to control trade discrimination and implies that popular theories of trade policy may be contingent on such rules.