Trading with the Enemy? Geopolitics and the Choice of Trade Measures
P12-S303-3
Presented by: Young Jun Choi, Andreas Dür
How does geopolitical affinity influence the trade measures that countries impose on one another? We argue that greater geopolitical distance is associated with an increased likelihood of a country enacting measures that negatively discriminate against commercial entities from the other country. This pattern should be particularly pronounced when the imposing country has a competitive disadvantage in the production of a good or the provision of a service.
To test this argument, we leverage data from the Global Trade Alert dataset, which comprises over 70,000 trade measures implemented globally since 2008, along with information on the countries affected by each measure. The dependent variable in the analysis is the number of discriminatory trade measures that country A imposes on country B within a sector during year t. The key predictor is the distance in ideal points between countries derived from voting patterns in the United Nations General Assembly. To test the role of competitive disadvantage, we moderate this variable with a measure of revealed comparative advantage at the sectoral level.
Preliminary findings support the hypotheses, indicating that geopolitical affinity plays a significant role in shaping trade policy. The paper contributes to ongoing debates on trade policymaking and the interplay between trade and geopolitical considerations.
To test this argument, we leverage data from the Global Trade Alert dataset, which comprises over 70,000 trade measures implemented globally since 2008, along with information on the countries affected by each measure. The dependent variable in the analysis is the number of discriminatory trade measures that country A imposes on country B within a sector during year t. The key predictor is the distance in ideal points between countries derived from voting patterns in the United Nations General Assembly. To test the role of competitive disadvantage, we moderate this variable with a measure of revealed comparative advantage at the sectoral level.
Preliminary findings support the hypotheses, indicating that geopolitical affinity plays a significant role in shaping trade policy. The paper contributes to ongoing debates on trade policymaking and the interplay between trade and geopolitical considerations.
Keywords: Trade policy, geopolitics, security, political economy