Trading Secrets: Disclosure Dilemmas in International Trade

Abstract

How do international organizations help states cooperate? Scholars have long argued that these organizations solve information problems by increasing transparency; however, we introduce a distinct information problem -- the disclosure dilemma -- that they can address using secrecy instead. Focusing on the domain of international trade, we claim that states often withhold economic information that is essential for adjudicating trade disputes because they fear harmful reactions by market actors. We demonstrate that properly designed international organizations can ameliorate this problem by receiving and protecting such information. After formalizing our theory, we assess our hypotheses using new data on information-sharing with the World Trade Organization. We show that key reforms designed to safeguard sensitive information increased the provision of this information and boosted trade cooperation in relevant industries. We conclude by discussing how solving this pervasive issue puts international institutions in tension with the normative goals of transparency and accountability.

Keywords: international cooperation, international institutions, international relations, information, trade, WTO