The Divergent Effects of Joining International Organizations: Trade Gains and the Rigors of WTO Accession

Abstract

AbstractGovernments have joined the World Trade Organization (WTO) in vastly different ways: some have taken mere days to join without undertaking any trade liberalization, while others have taken more than a decade and been forced to undergo significant liberalization. We argue that the more rigorous a state's accession to an international organization (IO), and thus the greater policy change required to join, the greater the benefits it will receive from membership in the organization. In the trade context, states facing greater scrutiny from the WTO and thus engaging in greater trade liberalization as part of the WTO accession process should experience greater trade on joining compared to those who face little scrutiny and engage in little if any liberalization. We develop a three-part classification of WTO members based on type of accession—early, automatic, and rigorous—and then compile detailed original data on the accession experiences of each relevant state, including length of time, number of veto players, rounds of questions, and tariff and nontariff commitments. Results of exhaustive quantitative tests on all countries from 1950 to 2006, which are robust to estimator, sample period, and model specification choices, consistently demonstrate that those who engage in the greatest amount of accession-driven liberalization experience the greatest trade increases from WTO membership, particularly in the years right after joining. In contrast, those who do little or nothing to join do not see any trade gains from being a WTO member. These findings reconcile previous findings on the effects of WTO membership on trade, highlight the causal importance of IO accession, and illuminate the conditions under which IOs will have beneficial effects for member states.