Overlapping Institutions, Learning, and Dispute Initiation in Regional Trade Agreements: Evidence from South America

Abstract

This article studies the functioning of dispute settlement mechanisms in regional trade agreements (RTAs) and their interaction with multilateral trade institutions. We examine the determinants of formal dispute initiation in RTAs among South American countries. Using an original data set of RTA disputes, we investigate the impact of economic power disparities, domestic political factors, and previous experience on the decision of South American countries to initiate a dispute against a regional trade partner. Our analysis indicates that both power asymmetries and domestic political factors influence the likelihood of dispute initiation at the regional level. We also find strong support for our hypothesis that previous experience in dispute settlement increases the probability that a country will file a complaint against a regional trade partner using regional mechanisms. Perhaps more interestingly, our empirical analysis also uncovers important cross-institutional effects. Prior participation in WTO disputes increases the propensity of states to file complaints at the regional level.