《Do We Really Know That the WTO Increases Trade》.pdf

Do We Really Know That the WTO Increases Trade? By ANDREW K. ROSE* This paper estimates the effect on international trade of multilateral trade agree- ments—the World Trade Organization (WTO), its predecessor the General Agree- ment on Tariffs and Trade (GATT), and the Generalized System of Preferences (GSP) extended from rich countries to developing countries. I use a standard “gravity” model of bilateral merchandise trade and a large panel data set covering over 50 years and 175 countries. An extensive search reveals little evidence that countriesjoining or belonging to the GATT/WTO have different trade patterns from outsiders, though the GSP seems to have a strong effect. (JEL F13, F15) Economists disagree about a lot, but not ev- and Trade (GATT) have actually promoted erything. Almost all of us think that interna- trade? tional trade should be free.1 Accordingly, the Maybe not. While theory, casual empiricism, multilateral organization charged with freeing and strong statements abound, there is, to my trade—the World Trade Organization (WTO)— knowledge, no compelling empirical evidence is probably the most popular international insti- showing that the GATT/WTO has actually en- tution inside the profession, certainly compared couraged trade. In this paper, I provide the rst with its obvious rivals, the International Mone- comprehensive econometric study of the effect tary Fund (IMF) and the World Bank. This of the postwar multilateral agreements on trade. makes much of the furor over the WTO unfath- It turns out that membership in the GATT/WTO omable to most