Domestic Capacity and the Implementation Gap in Regional Trade Agreements

Abstract

Regional trade agreements (RTAs) all over the world share many of the same institutional features—from dispute-settlement mechanisms to legalized language to escape clauses—and espouse many of the same goals. But many of those features are unimplemented in different contexts across the world. Many observers have pointed to an “implementation gap” in RTAs—most of which promise much but deliver relatively little—but offer no explanation for this gap. I argue that this is explained by domestic capacity. In countries where the rule of law is weak and infrastructure is insufficient—and particularly when those elements interact—it is difficult to implement trade agreements. This article utilizes expert survey data to demonstrate that member states with poor infrastructure and little respect for the rule of law are unable to carry out the obligations they agree to in their trade agreements. Domestic capacity—both physical and institutional—can explain the implementation gap between what agreements promise and what they deliver, as well as the variation in the economic performance of these RTAs.