Trade Law and Trade Flows

Abstract

This paper performs a structural gravity estimation of the effect of commercial law conventions on international trade flows. We focus on trade law agreements aimed to privately resolve disputes among partners: international commercial arbitration, model law and conciliation. Our results suggest three interesting traits. First, international dispute resolution mechanisms have a moderate positive impact on trade, which is stronger for similar country-pairs in terms of income. Second, this effect is not observed in agreements which do not tackle private resolution mechanisms. Third, international commercial arbitration is the most effective tool to promote trade.