The Role of Languages in International Trade Disputes

Abstract

This paper examines the role of languages in international trade disputes using a comprehensive data set of 160 countries covering 565 WTO trade dispute cases from 1995 to 2018. In international trade disputes, languages play a notable positive role either as a language similarity or as a language barrier. The findings indicate that language-like trading countries tend to be more actively involved in trade disputes, such as similarity in spoken language between trading countries increase trade disputes likelihood by 0.34% and language similarity with both trade partners and WTO increase trade disputes probability by 0.79%, suggesting that more communication and negotiating capacity increase the probability of trade disputes. The findings further indicate that trade partners having language barriers are also involved in trade conflicts with an average probability of 0.19 %, which implies language barriers increase ineffective communication and misunderstandings. English and Spanish speaking countries participation in trade disputes are noteworthy. This paper contributes to the existing literature by illustrating the role of languages as language similarity and barriers with inherent communication, negotiation capacity, and incapacity channels in international trade disputes. Keywords: Trade Disputes, Language similarity, Language Barriers, Common Spoken Language, WTO official languages.