Setting the Negotiation Table: The Selection of Institutions for Trade Disputes

This paper examines how interest groups influence the decision to negotiate trade problems at the bilateral level, through adjudication, or in a comprehensive trade round. The institutional venues available for trade negotiations vary in terms of issues, rules, actors, and duration. Interest groups have preferences over the choice of institutional venue because differences in the scope and timing of the negotiation will directly impact their interests. Consequently, groups will lobby for both a specific fora and policy outcome. This paper presents a framework for understanding how the relative balance between interest group pressure on both sides influences the choice of negotiation forum. I argue that this dynamic pushes some of the most difficult trade problems into WTO dispute adjudication or trade rounds, while easier issues are likely to be dealt with in bilateral or regional negotiations. Deadlock in the WTO may lead governments to focus on alternative fora, but doing so reduces the prospect of resolving the toughest trade problems. ∗Assistant Professor, Department of Politics and Woodrow Wilson School of International Affairs, Princeton University. Address: Bendheim Hall, Princeton University, Princeton, NJ 08544. Phone: 609– 258–0177. Fax: 609–258–5349. Email: [email protected] The 2000 WTO ministerial meeting collapsed as protesters filled the streets of Seattle and governments disagreed over the agenda for a new WTO trade round. A year later, however, a meeting venue in Doha Qatar, a broader agenda, and strong U.S. leadership allowed the same governments to successfully launch the Doha Round. The 2003 WTO ministerial meeting held in Cancun Mexico was expected to finalize a draft agreement so that the round could conclude on schedule by 2005. Nevertheless, bringing 146 WTO members to agree on how to liberalize everything from agriculture to investment rules is no simple task. The Cancun meeting came to an acrimonious end without agreement when developing countries voiced discontent over lack of progress in agricultural liberalization by advanced industrial countries. The United States and Europe, on the other hand, blamed developing countries for not offering to open their own economies to trade and investment. When the multilateral trade round stalled after the failed ministerial meeting in Cancun, the U.S. Trade Representative Robert Zoellick declared that he would pursue the American trade agenda through “advances on multiple fronts.” This has meant pushing forward bilateral agreements and talks for a regional free trade agreement with Central and South America. The United States is not alone in its strategy, for Europe has long had a network of bilateral and regional agreements for preferential trading relationships. Even Japan, which had relied exclusively on the GATT/WTO multilateral route, has begun to negotiate in earnest to conclude bilateral and regional trade agreements. For trade negotiators, it has become increasingly common to pursue trade agendas on multiple fronts. For any given trade problem, the government could engage a trade partner in bilateral consultations, file a legal complaint for adjudication, negotiate a comprehensive bilateral or regional free trade agreement, or address the problem in the multilateral trade round. What guides the choice between these options? Despite the proliferation of international institutions, little attention has been given to how states choose when to use an institution. Research has focused on the creation of new institutions or the effects of institutions on cooperation. Less understood is the political dynamic of selection among multiple existing institutional fora. Yet thinking more about when and why countries use institutions promises to offer insights into both the prior question of their creation and the later evaluation of their effectiveness. Drawing