United we stand and divided we fall: Coalitions in the GATT/WTO negotiations

Abstract

Coalition formation is considered an important tool to leverage bargaining power in GATT/WTO negotiations. While most of the literature has focused on developing countries, we show that sizable economies are the primary users of coalitions at the GATT/WTO. We also find evidence that middle powers do not exhibit distinctive collectivist behavior at the WTO. There is a linear and strong relationship between countries’ economic power—measured as real GDP—and coalition participation within the GATT/WTO system. We explain these results, presenting evidence that large economies—countries that have greater trade negotiations power—join coalitions more often because they are better equipped to absorb transaction costs and more prepared to deal with the uncertainty of WTO negotiations. We also found a relationship between coalition entry and trade openness, with countries more open to trade joining coalitions more often.