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Measuring the Cost of Privacy: A Look at the Distributional Effects of Private Bargaining

  • Jeffrey Kucik and Krzysztof J. Pelc
Abstract

Transparency is one of the most contested aspects of international organizations. While observers frequently call for greater oversight of policy making, evidence suggests that settlement between states is more likely when negotiations are conducted behind closed doors. The World Trade Organization’s (WTO) legal body provides a useful illustration of these competing perspectives. As in many courts, WTO dispute settlement is designed explicitly to facilitate settlement through private consultations. However, this study argues that the privacy of negotiations creates opportunities for states to strike deals that disadvantage others. Looking at product-level trade flows from all disputes between 1995 and 2011, it finds that private (early) settlements lead to discriminatory trade outcomes – complainant countries gain disproportionately more than the rest of the membership. When the facts of a case are made known through a ruling, these disproportional gains disappear entirely. The article also finds that third-party participation – commonly criticized for making settlement less likely – significantly reduces disparities in post-dispute trade. It then draws parallels to domestic law and concludes with a set of policy prescriptions.

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Copyright
Footnotes
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Department of Political Science, City College of New York (email: jkucik@ccny.cuny.edu); Department of Political Science, McGill University (email: kj.pelc@mcgill.ca). We thank Marc L. Busch, Stephen Chaudoin, and the participants of the European Consortium of Political Research Joint Sessions of Workshops 2012, the University of Copenhagen in June 2013, the University of Warsaw in September 2013 and the International Political Economy Society 2013 annual meeting for useful comments. All remaining errors are our own. We thank Yanick Touchette, Casey McDermott and Eliza Wood for excellent research assistance. Data replication sets and online appendices are available at http://dx.doi.org/doi:10.1017/S0007123414000520.

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References
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British Journal of Political Science
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