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The Domestic Politics of Preferential Trade Agreements in Hard Times


There is evidence that some countries negotiate trade agreements during economic downturns. Why would a leader do this? We argue that political leaders can gain from such agreements because of the signals they send to their public. The public are less likely to blame leaders for adverse economic conditions when they have implemented sound economic policies, such as signing agreements designed to liberalize trade and prevent a slide into protectionism. In hard economic times, leaders – especially those in democratic environments – may find that trade agreements are a useful way to reassure the public. Since majorities in many countries around the world view trade favorably, leaders may see agreements that prevent them from adopting protectionism as a way to maintain support. We evaluate this argument by analyzing preferential trade agreements (PTAs) formed since 1962. We find that, on average, democratic countries are more likely to form PTAs during hard economic times. We also find that democratic leaders who sign PTAs during downturns enjoy a longer tenure than their counterparts who do not sign such agreements.

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Earlier versions of this article were presented at the 2015 annual meeting of the American Political Science Association and at conferences held at Georgetown University, McGill University, Princeton University, and Stanford University. For helpful comments and suggestions, we are grateful to participants in these events, two anonymous reviewers, and to Mark Brawley, Marc Busch, Christina Davis, Dorothy Kronick, Marc Meredith, Lauren Peritz, Michael Tomz, and L. Alan Winters. For research assistance, we are grateful to Dominic De Sapio, Raymond Hicks, and Rumi Morishima.

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World Trade Review
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