Votes, Vetoes, and the Political Economy of International Trade Agreements

by Edward D. Mansfield, Helen V. Milner

Preferential trading arrangements (PTAs) play an increasingly prominent role in the global political economy, two notable examples being the European Union and the North American Free Trade Agreement. These agreements foster economic integration among member states by enhancing their access to one another's markets. Yet despite the importance of PTAs to international trade and world politics, until now little attention has been focused on why governments choose to join them and how governments design them. This book offers valuable new insights into the political economy of PTA formation. Many economists have argued that the roots of these agreements lie in the promise they hold for improving the welfare of member states. Others have posited that trade agreements are a response to global political conditions. Edward Mansfield and Helen Milner argue that domestic politics provide a crucial impetus to the decision by governments to enter trade pacts. Drawing on this argument, they explain why democracies are more likely to enter PTAs than nondemocratic regimes, and why as the number of veto players--interest groups with the power to block policy change--increases in a prospective member state, the likelihood of the state entering a trade agreement is reduced. The book provides a novel view of the political foundations of trade agreements.

Genres: Economics

224 pages, Paperback

First published January 1, 2012

Reviews

[Jeffrey Hart · Rating 4 out of 5]

This is a study of preferential trade agreements (PTAs). PTAs are distinguished from the multilateral regimes that result from multilateral trade negotiations, but like those regimes PTAs can result in increases in the liberalization of world trade. The authors spend the first chapter defending their choice of subject matter and explaining why a better understanding of PTAs is needed. The second chapter provides a theory of trade agreements. The third outlines some important systemic findings: the frequency of PTAs increases with the waning of hegemony, the increase in the number of democratic governments, and strategic interactions between states and PTAs themselves. In the fourth chapter, the authors attempt to demonstrate that the increase in democracy affects the frequency of PTAs by reducing the number of veto players. In the fifth chapter, additional hypotheses from the theory in the second chapter are tested. The authors find that left-wing governments in democracies, autocracies with domestic political competition, and countries which are highly dependent on international trade are more likely to sign PTAs. This is consistent with the stress on the importance of presence or absence of veto players. Finally the authors stress the importance of the usefulness of PTAs and other trade agreements in permitting political elites to address the demands of domestic constituencies. They argue, in the final chapter, that domestic politics rather than international diffusion of norms, is a better way to explain the recent proliferation of PTAs and other trade agreements.

[Joseph Jupille · Rating 3 out of 5]

Good summary of fifteen years of research into PTA formation, with special focus on the important of democracy (votes) and vetoes.