Did Regionalism Kill the World Trade Organization?

For over 60 years, scholars have theorized about whether regional trade agreements would encourage countries to participate more in multilateral trade negotiations or would undermine those trade talks. There are theoretical arguments on both sides of this debate but little empirical work has been done because of the difficulty of measuring how committed countries have been to multilateralism. This paper presents a novel way to measure country cooperation with the WTO using an events dataset of news reports. Positive signals of cooperation with multilateralism include reports that a country praised the WTO, made appeals to it, expressed an intention to cooperate, or engaged in WTO negotiations or consultations. Negative signals, indicating a lack of cooperation, include reports of countries making demands, complaints, or threats toward the WTO or of countries rejecting WTO proposals. Using stochastic frontier analysis, fixed effects, and instrumental variables models, the paper estimates the relationship between measures of regionalism and country cooperation with the WTO. In this way, the paper provides one of the first tests of how regionalism affects countries’ commitment to multilateralism. JEL classification: F10