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.
Robert W. Staiger —
Stanford, Wisconsin and NBER
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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