Cooperation and Governance in International Trade

Cooperation and Governance in International Trade: The Strategic Organizational Approach

Beth V. Yarbrough
Robert M. Yarbrough
Copyright Date: 1992
Pages: 194
https://www.jstor.org/stable/j.ctt7zvsw5
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  • Book Info
    Cooperation and Governance in International Trade
    Book Description:

    International trade liberalization historically has taken many organizational forms--unilateral, bilateral, minilateral, and multilateral. Given the proliferation of normative views about which of these should be pursued, economists and political scientists have devoted surprisingly little attention to the reasons for the observed variation in the chosen forms. This book is the first to develop a single theoretical framework to account for past liberalization practices and also to anticipate ongoing changes in the international organization of trade policy. Growing out of a multidisciplinary effort combining economics, politics, organization, and law, the book's strategic organizational approach will interest students of trade, international relations, or institutional arrangements. Central to the strategic organizational approach is the view that organizational variety reflects alternate governance structures used to facilitate and enforce agreements. Among the successes of the approach are explanations of unilateral liberalization by nineteenth-century Britain, U.S. governance of multilateral liberalization under the early postwar GATT, growing use of bilateral governance to limit nontariff trade barriers, and anticipation of major moves toward minilateral governance, such as Europe/1992 and the Canada-U.S. Free-Trade Agreement.

    Originally published in 1992.

    ThePrinceton Legacy Libraryuses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

    eISBN: 978-1-4008-6290-0
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. ABBREVIATIONS
    (pp. vii-viii)
  4. PREFACE
    (pp. ix-2)
  5. Chapter One INTRODUCTION
    (pp. 3-19)

    The arena of modern international trade policy provides an intriguing set of puzzles.¹ Although country names, product categories, and specific disputes have changed, many fundamental issues and debates have remained remarkably constant for centuries.² Because of their direct impact on standards of living and their linkages to other aspects of international relations—including war, peace, and international cooperation—few questions of international trade policy have escaped attention. In this book we focus on one question that has, however, received relatively scant analysis:What can explain the historically observed institutional variety in efforts to liberalize or open the world trading system?...

  6. Chapter Two STRATEGIC ORGANIZATION AND INTERNATIONAL TRADE INSTITUTIONS
    (pp. 20-48)

    In a social exchange or transaction, parties may find themselves in harmony, where unilateral action suffices and only the simplest social institutions are required, or in actual or potential conflict, where different institutions hold varying levels of promise for achieving cooperation. In many diverse contexts, social organization faces a political-economic dilemma: actors within a group have common interests in expanding the size of the relevant pie, but conflictual interests in dividing it. Cooperation increases the size of the pie, but unilateral defection enables a party to capture a larger share of the smaller pie. The result—as in the classic...

  7. Chapter Three HEGEMONY AND INTERNATIONAL TRADE: UNILATERAL OR MULTILATERAL LIBERALIZATION?
    (pp. 49-67)

    The economic theories of international trade and comparative advantage associated with Adam Smith, David Ricardo, Eli Heckscher, Bertil Ohlin, and Paul Samuelson treat countries anonymously and symmetrically.¹ However, several recent politically focused perspectives embody a special role for a single country. The theories associated with Robert Gilpin, Charles Kindleberger, Robert Keohane, Stephen Krasner, and others emphasize the role of a hegemonic country in creation and maintenance of open international trade and monetary regimes.²

    A hegemon is a state that is dominant in its leadership in the world economy. Among other attributes of leadership, such a country may be willing and...

  8. Chapter Four SELF-HELP AND PRECOMMITMENT: BILATERAL TRADE LIBERALIZATION
    (pp. 68-85)

    According to the strategic organizational approach, when international trade involves relation-specific assets, the resulting vulnerability to opportunistic protectionism implies a need for safeguards to support cooperation. Unilateral liberalization is not viable under such conditions. Sometimes a hegemon can alter the rules of the game to allow cooperation by acting as a third-party enforcer. For example, we argued in Chapter Three that U.S. hegemony during the early postwar years supported the success of the General Agreement on Tariffs and Trade, a system that used norms of multilateralism, nondiscrimination, and most-favored-nation status. However, in a world trading system not dominated by a...

  9. Chapter Five THIRD-PARTY GOVERNANCE AND GROUP MEMBERSHIP: MINILATERAL TRADE LIBERALIZATION
    (pp. 86-110)

    So far, we have analyzed two strategic organizational responses to relation-specific contracting problems:multilateralliberalization under the governance of a hegemon (Chapter Three) andbilateralliberalization under self-enforcing agreements (Chapter Four).¹ A third option—minilateralism—is the subject of this chapter. Small groups of countries may create supranational institutions to perform a third-party governance role. Such creations are problematic, of course, as they necessarily impinge on national sovereignty. Nonetheless, when relation-specific investments are extensive, the benefits of minilateralism may outweigh its obvious problems.

    One way of viewing preferential trade agreements, such as the European Community and the Canada-U.S. Free-Trade Agreement,...

  10. Chapter Six THE STRATEGIC ORGANIZATIONAL APPROACH TO INTERNATIONAL INSTITUTIONS AND THE NEW ECONOMICS OF ORGANIZATION
    (pp. 111-133)

    The fundamental trade policy choice—between open trade and protectionism—varies across at least three dimensions: time, country, and sector or industry. For example, trade was relatively open in the 1860s but closed in the 1930s; Hong Kong’s trade policies generally are more open than India’s; and textile and apparel trade is subject to more restrictions than most other manufacturing sectors. Each of these dimensions of trade policy has received considerable attention from both economists and political scientists, although definitive answers still are lacking in several areas. The business-cycle, political power/voting, and hegemony-based trade theories outlined in Chapter One provide...

  11. Chapter Seven THE STRATEGIC ORGANIZATIONAL APPROACH: AN ASSESSMENT
    (pp. 134-148)

    Although modern international trade policy provides many fascinating episodes, observations, and issues, most work by economists and political scientists explores the choice between free trade and protectionism. We have chosen instead to focus our examination of international trade policy on the three centralproblématiquesof political economy as articulated by Susan Strange: “the ways things are managed, how they got to be managed in that particular way, and what choices this leaves realistically open for the future.”¹ In particular, why has trade policy, whatever its fluctuating balance between free-trade and protectionist elements, taken such strikingly different organizational or institutional forms?...

  12. BIBLIOGRAPHY
    (pp. 149-170)
  13. AUTHOR INDEX
    (pp. 171-175)
  14. SUBJECT INDEX
    (pp. 176-182)