RESEARCH AND ANALYSIS: WORKING PAPERS
On the Effects of GATT/WTO Membership on Trade: They are Positive and Large After All
We capitalize on the latest developments in the empirical structural gravity literature to revisit the question of whether and how much does GATT/WTO membership affect international trade. We are the first to capture the non-discriminatory nature of GATT/WTO commitments by measuring the effects of GATT/WTO membership on international trade relative to domestic sales.
These unilateral effects of GATT/WTO membership are found to be large, positive, and statistically significant. We also obtain bilateral GATT/WTO estimates, which are larger than those reported in the literature. In particular, our results imply that, on average, joining GATT and/or WTO has increased trade between members by 171% and trade between member and non-member countries by about 88%. We also find that although both GATT/WTO has been effective in promoting trade between members, the WTO has been more effective in promoting trade with non-members than GATT. A battery of sensitivity experiments confirms the effectiveness of our methods and robustness of our main findings.
No: ERSD-2019-09
Authors: Mario Larch, José Antonio Monteiro, Roberta Piermartini and Yoto V. Yotov
Manuscript date: May 2019
Key Words:
GATT/WTO, International Trade, Domestic Sales, Structural Gravity
JEL classification numbers:
F13, F14, F16
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This is a working paper, and hence it represents research in progress. The opinions expressed in this paper are those of its author. They are not intended to represent the positions or opinions of the WTO or its members and are without prejudice to members' rights and obligations under the WTO. Any errors are attributable to the author.
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