We use cookies on this website to give you a better user experience. By continuing to browse the site, you are agreeing to our use of cookies. Learn more

Beyond Trade Creation: Free Trade Agreements and Trade Disputes

Beyond Trade Creation: Free Trade Agreements and Trade Disputes
Date:
30 March 2015
Category:
Trade
Authors:
Tan Li, Larry D. Qiu
Tags:

Print Article:

Abstract


This paper investigates the effects of the formation of free trade agreements (FTAs) on trade disputes. We construct a unique and comprehensive dataset on inter-country trade disputes from 1995 to 2007. The dataset covers 110 countries and 1130 trade disputes. We find that the incidences of trade disputes between two countries are positively associated with economic size, economic growth, and trade shares, thereby lending partial support to the "capacity hypothesis" in the dispute literature. More importantly, we obtain that FTAs between two countries reduces the occurrences of trade disputes between them. We also find that FTAs relying on the WTO dispute settlement mechanism further reduce trade disputes between their members compared to FTAs without provisions on trade dispute settlement. By contrast, the dispute-reducing effect is mitigated in FTAs which have their own dispute settlement mechanisms. The main results are robust to the control for possible measurement error and endogeneity problem.

ERIA-DP-2015-28

Search ERIA.org

Latest Multimedia

Indonesia's ASEAN Chairmanship 2023 High-Level Policy Dialogue: ASEAN Digital Community 2045

ERIA Knowledge Lab Discusses Scaling Up Innovation and Digital Technology Ecosystem

Is ASEAN Ready for Electric Vehicles? | ASEAN Insights Podcast

Latest Articles

Energy, EV, Electric Vehicle, EV battery, ASEAN
28 March 2024
Editor(s)/Author(s): Naoko Doi, Alloysius Joko Purwanto, Shigeru Suehiro, Soichi Morimoto, Akira Takamine, Yasuo Kawada, Koichi Sasaki, Yuhji Matsuo
In East Asia Summit (EAS) countries, recent progress in electrifying the transport sector[...]
Trade, Trade Policy, COVID-19, Dynamic Spillovers, Sino-US Trade Friction, United States, Japan, Republic of Korea
21 March 2024
Editor(s)/Author(s): Chien-Chiang Lee, Farzan Yahya
In this paper, we examine the spillover and connectedness between[...]