Diplomacy and the Settlement of International Trade Disputes

Forthcoming, Journal of Conflict Resolution

37 Pages Posted: 1 Jan 2020

See all articles by Julia Gray

Julia Gray

University of Pennsylvania - Department of Political Science

Philip B.K. Potter

University of Virginia - Woodrow Wilson Department of Politics

Date Written: December 12, 2019

Abstract

How do countries settle disputes in the shadow of the law? Even in the presence of legalized dispute settlement, countries still rely on diplomatic channels to resolve conflicts. But it can be difficult to assess diplomacy's impact on dispute resolution, because those channels tend to be opaque. We present both an original theory of the impact of diplomacy on dispute resolution as well as a novel measure of diplomacy. If countries with close or, conversely, distant relationships use legal channels for dispute resolution, diplomacy will have little impact on dispute settlement; resorting to legal recourse among friends or adversaries likely means that the dispute is intractable. However, diplomacy can increase the chances of settlement between countries with moderate levels of affinity. We test this argument using a protocol-based proxy for diplomatic interactions -- gifts given at the occasion of meetings between diplomatic counterparts -- that would otherwise be difficult to observe. Using the case of the United States and its disputes in the World Trade Organization, we find support for our argument. This suggests that even when countries resort to legalized methods of dispute settlement, bilateral dealmaking still plays an important role.

Keywords: WTO, trade disputes, diplomacy

JEL Classification: F10, F13, F53, F55

Suggested Citation

Gray, Julia and Potter, Philip B.K., Diplomacy and the Settlement of International Trade Disputes (December 12, 2019). Forthcoming, Journal of Conflict Resolution, Available at SSRN: https://ssrn.com/abstract=3502533 or http://dx.doi.org/10.2139/ssrn.3502533

Julia Gray (Contact Author)

University of Pennsylvania - Department of Political Science ( email )

Stiteler Hall
Philadelphia, PA 19104
United States

HOME PAGE: http://www.sas.upenn.edu/polisci/people/standing-faculty/julia-gray

Philip B.K. Potter

University of Virginia - Woodrow Wilson Department of Politics ( email )

PO Box 400787
University of Virginia
Charlottesville, VA 22904
United States

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