Advanced Search  than Others?: An Explanation for PTA Bargaining Delay

Tuxhorn, Kim-Lee Grant

Graduate Thesis Or Dissertation

Advanced Search than Others?: An Explanation for PTA Bargaining Delay Public Deposited

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Citeable URL: https://scholar.colorado.edu/concern/graduate_thesis_or_dissertations/ng451h65t

Abstract

Why do some trade agreements take longer to conclude than others? PTAs have increasingly grown in number over the last 30 years, and nearly every country is member to one, if not dozens. Yet despite the popularity and the associated costs of interstate bargaining, substantial variation exists in the length of negotiation times. Some preferential trade agreement (PTA) negotiations take over a decade to conclude while others are implemented in less in two years. More puzzling, my data show that on average PTA negotiations require more time to conclude than World Trade Organization (WTO) rounds. This finding runs contrary to the belief suggesting PTAs are a \second-best solution" to impasses in the multilateral organization. Assuming all firms wish to maximize profits and avoid market exit, I argue that import-competing firms (export-oriented firms) have incentives to slow down (speed up) the implementation of PTAs. Since exporters tend to be larger, more productive and have greater resources at their disposal, these producers tend to lobby at the firm-level because they can afford to pay the cost. In contrast, domestically-oriented firms tend to be smaller with less resources available to them. These firm characteristics force domestically-oriented firms to pool resources to lobby and lobby at the industry level. Reliance on other firms creates a collective action problem wherein some firms may not be willing to pay. I show how increasing levels of intra-industry trade leads to greater collective action problem for import-competers and thereby advantaging exporters. Based on these firm preferences, I make four theoretical propositions about bargaining delay. First, negotiations composed of states with predominantly export-oriented firms will be more likely to see shorter bargaining times. Second, trade structures disincentivizing domestically-oriented firms from mobilizing will lead to less delay. Trade structure refers to the type of trade flows between states (inter-industry and intra-industry). Third, increasing levels of market asymmetry will prolong delay. Fourth, increasing levels of exporter pressure decreases the effect of market asymmetry on PTA bargaining times. I test my argument using a new data set containing PTA bargaining times and several measures of relative lobbying pressure. Even after controlling for seemingly relevant predictors like regime type and wealth, I find that bargaining times decrease as the level of intra-industry trade increases, and that this relationship becomes stronger when intra-industry trade becomes more vertically oriented. I use case study work to complement the quantitative analysis and illustrate how the causal mechanism of lobbying influences the length of bargaining times.

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