Secret negotiations at the World Trade Organization create a big problem

By Jeffrey Kucik and Krzysztof J. Pelc

Activists shout slogans as they march during an anti-Trump and anti-TPP protest on Nov. 14 in Washington, D.C. (Alex Wong/Getty Images)

After decades of steadily increasing globalization, trade liberalization has slowed to a standstill. Congress has delayed ratification of the Trans-Pacific Partnership (TPP) indefinitely. And negotiations around the Transatlantic Trade and Investment Partnership (TTIP) have ground to a halt.

In both the United States and abroad, these agreements are dogged by widespread concerns over the nontransparent manner in which trade deals are negotiated. Critics argue that bargaining behind closed doors unfairly shuts out the voices of organized labor, advocacy groups and nonmember countries. But defenders argue that private negotiations are the only way to reach a deal.

In a recent study in the British Journal of Political Science, we looked at the consequences of private bargaining during World Trade Organization (WTO) disputes. The WTO encourages states to consult with one another privately before initiating formal litigation.

We investigated who gains the most from private bargaining

We use new data on trade in disputed products and on third-party participation. Our analysis contains two parts. First, we investigate whether complainant countries enjoy greater trade gains after early (private) settlements. The WTO requires that any individual state’s market concessions are extended to all members. So if complainant countries enjoy greater market access than nonparticipants, we regard this as evidence of trade discrimination.

Second, we test whether third parties — countries that participate as observers in disputes — prevent this discrimination. Having more observers in the room should reduce litigants’ opportunities to strike deals that disadvantage other members.

Our evidence suggests privacy is a mixed blessing. Shielding negotiators from public view does significantly increase the likelihood that the parties can reach an early settlement, precluding the need for costly litigation.

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