International trade and domestic politics: the domestic sources of international trade agreements and institutions

Abstract

Introduction Over the past fifty years, barriers to international trade have decreased substantially. While the decline in protectionism since World War II has stemmed partly from unilateral changes in trade policy by countries, it also has been a result of agreements among countries to liberalize their trade policies. International trade agreements and especially the GATT (now the WTO) have played an important role in this liberalization process. This chapter analyzes the conditions under which states have concluded such agreements to lower their trade barriers and joined such international institutions. More generally, it explores the domestic factors affecting international economic cooperation. We make two central arguments, both relating international trade to domestic politics. The first is that domestic political reasons can provide an important motive for leaders to sign trade agreements and abide by international trade rules. The second is that the internal design of international trade agreements may depend in part on domestic politics. Again, domestic political reasons can be an important motive for leaders in choosing a specific structure for international trade agreements. In particular, we show that the inclusion of escape clause mechanisms in trade agreements can result from domestic incentives. Indeed, most strongly put, without such escape clauses in international agreements, political leaders could not afford to sign trade agreements because of domestic pressures. Hence their inclusion and character are important for such agreements and depend upon the nature of domestic politics in the countries. We thus join the debate over the causes of economic cooperation.