United we stand and divided we fall: Coalitions in the GATT/WTO negotiations

Abstract

Coalition formation is considered an important tool to leverage bargaining power in GATT/WTO negotiations. While most of the literature has focused on developing countries, we show that sizable economies are the primary users of coalitions at the GATT/WTO. We also find evidence that middle powers do not exhibit distinctive collectivist behavior at the WTO. There is a linear and strong relationship between countries' economic power-measured as real GDP-and coalition participation within the GATT/WTO system. We explain these results, presenting evidence that large economies-countries that have greater trade negotiations power-join coalitions more often because they are better equipped to absorb transaction costs and more prepared to deal with the uncertainty of WTO negotiations. We also found a relationship between coalition entry and trade openness, with countries more open to trade joining coalitions more often.