The key questions for the WTO — the answers to which largely dictate the choice between shallow and deep approaches to integration — appear to be two: (1) Is it the terms-of-trade problem or the commitment problem that WTO member governments seek to solve with their WTO membership?; and (2) Is it market clearing or o¤shoring/bilateral bargaining that is now the most prominent mechanism for the determination of international prices? I suggest that evidence on the …rst question points to the terms-of-trade theory and hence toward shallow integration, but that answering the second question may be the key to identifying the best way forward on NTMs for the WTO.

No: ERSD-2012-01

Author:

Robert W. Staiger — Stanford, Wisconsin and NBER

Manuscript date: January 2012

Key Words:

terms of trade, commitment, border measures, behind-the-border measures, offshoring, bilateral bargaining.

JEL classification numbers:

D62, F13, F55, H21 and H23

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This is a working paper, and hence it represents research in progress. This paper represents the opinions of the author, and is the product of professional research. It is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members. Any errors are the fault of the author. Copies of working papers can be requested from the divisional secretariat by writing to: Economic Research and Statistics Division, World Trade Organization, Rue de Lausanne 154, CH 1211 Geneva 21, Switzerland. Please request papers by number and title.

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