Reputations for conflict and the formation of preferential trade agreements

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Creator

Foster, Lee
- Affiliation: College of Arts and Sciences, Department of Political Science

Abstract

The influence that reputations for hostility have on future interstate conflict and the formation of security alliances has been well-studied. By comparison, the influence of such reputations on relations outside the security realm has received relatively scant attention. This paper begins to close this gap, exploring how reputations for militarized conflict influence the formation and design of reciprocal trade arrangements. Specifically, I argue that an extra-dyadic reputation for hostility undermines the formation of Preferential Trade Agreements (PTAs) within the dyad, as a potential partner becomes skeptical of a state's willingness to adhere to agreement terms and to follow peaceful dispute settlement channels. Additionally, where PTAs are signed, reputations for hostility increase the likelihood of institutionalized, legalistic dispute settlement mechanisms (DSMs) being incorporated, as signatories attempt to shield themselves from future opportunistic behavior. Importantly, however, I argue that these reputational effects are only influential when states are not party to existing formal economic or security agreements. Logistic analyses of PTA signings and DSM design for the decade 1991-2000 provide empirical support for this argument. The results suggest that, regardless of actual intent, reputations for hostility can follow states around and undermine their ability to form cooperative relationships outside the security domain.

Date of publication