The Relationship between GATT Membership and Structural Breaks in International Trade

Abstract

Using sequential structural break tests, we attempt to determine if and when a new GATT member experiences statistically significant changes in the paths of its trade with incumbent members. To test for the nature of a change, we compare the averages of the actual postbreak trade shares with the averages of the postbreak extrapolated trade shares. Should a significant structural break be detected, we compare the break year with the accession year of that country to GATT. Our results show that only a small fraction of countries experience significant positive structural breaks in their trade shares. Furthermore, any significant positive breaks generally occur far before or after the time of a country's accession to GATT.