Multilateral Organization vs. Bilateral Negotiations: A Case of the Trade-Related Aspects of Intellectual Property Rights (TRIPs)

Abstract

In the 1990s, the issue of intellectual property rights (IPR) protection gained a prominent place on the international trade agenda, which led to the establishment of the trade-related aspects of intellectual property rights (TRIPs) as a part of the WTO regime. Two questions are asked regarding this development: whether a multilateral organization such as the WTO performs better than bilateral negotiations in resolving IPR disputes, and what happened around the 1990s to create an environment favorable to the establishment of a multilateral organization. To deal with these issues, this paper takes the IPE (international political economy) approach. Using a very simple game theory model, I derive the cases in which a multilateral organization has better performances. Then, it is used to show that political pressures due to the growth of the US trade deficit in the late 1980s could have been the reason that a multilateral organization became the institutional equilibrium.