TY - JOUR AU - Bagwell,Kyle AU - Staiger,Robert W. TI - Enforcement, Private Political Pressure and the GATT/WTO Escape Clause JF - National Bureau of Economic Research Working Paper Series VL - No. 10987 PY - 2004 Y2 - December 2004 UR - http://www.nber.org/papers/w10987 L1 - http://www.nber.org/papers/w10987.pdf N1 - Author contact info: Kyle Bagwell Department of Economics Stanford University Landau Economics Building 579 Serra Mall Stanford, CA 94305-6072 Tel: (650) 723-3251 E-Mail: kbagwell@stanford.edu Robert W. Staiger Department of Economics The University of Wisconsin 1180 Observatory Drive Madison, WI 53705 Tel: 608/262-2265 Fax: 608/263-3876 E-Mail: rstaiger@wisc.edu AB - We consider the design and implementation of international trade agreements when: (i) negotiations are undertaken and commitments made in the presence of uncertainty about future political pressures; (ii) governments possess private information about political pressures at the time that the agreement is actually implemented; and (iii) negotiated commitments can be implemented only if they are self-enforcing. We thus consider the design of self-enforcing trade agreements among governments that acquire private information over time. In this context, we provide equilibrium interpretations of GATT/WTO negotiations regarding upper bounds on applied tariffs and GATT/WTO escape clauses. We find that governments achieve greater welfare when they negotiate the optimal upper bound on tariffs rather than precise tariff levels; furthermore, when governments negotiate the optimal upper bound on tariffs, the observed applied tariffs often fall strictly below the bound. Our analysis also provides a novel interpretation of a feature of the WTO Safeguard Agreement, under which escape clause actions cannot be re-imposed in the same industry for a time period equal to the duration of the most recent escape clause action. We find that a dynamic usage constraint of this kind can raise the expected welfare of negotiating governments. ER -