Reciprocity in trade: the utility of a bargaining strategy

Abstract

Recent works in international relations theory have focused on the value of reciprocity as a means of achieving cooperation in international politics. They argue that even in an anarchic setting in which self-help typifies the behavior of sovereign nation states, the strategy of matching comparable responses to the actions of other nations may educate them over time to cooperate. This article empirically confirms that this assumption is correct. It examines the use of flexible reciprocal bargaining strategies between the United States and its major trading partners in key sectors in which surplus capacity and domestic adjustment difficulties have made commercial conflicts apparent. The outcomes of most of the disputes demonstrate that reciprocity is an effective means of eliciting cooperation from trading partners. Results also illustrate that this cooperation is usually consistent with the General Agreement on Tariffs and Trade (GATT) norms of liberal trade and dispute settlement, even when it is inconsistent with the GATT principle of nondiscrimination.