Domestic Policies, National Sovereignty and International Economic Institutions

Kyle Bagwell, Robert W. Staiger

NBER Working Paper No. 7293
Issued in August 1999
NBER Program(s):International Trade and Investment

To what extent must nations cede control over their economic and social policies if global efficiency is to be achieved in an interdependent world? This question is at the center of the debate over the future role of GATT (and its successor, the WTO) in the realm of labor and environmental standards. Current GATT rules reflect the primacy of market access concerns in GATT practice, and this orientation is seen increasingly as unfriendly to labor and environmental causes. Fundamental changes to GATT are being considered as a result, changes that would expand the scope of GATT negotiations to include labor and environmental policies, and would lead to a significant loss of sovereignty for national governments. In this paper we establish that there is no need for the WTO to expand the scope of its negotiations in this way. We show instead that the market access focus of current GATT rules is well-equipped to handle the problems associated with choices over labor and environmental standards, and that with relatively modest changes that grant governments more sovereignty, not less, these rules can in principle deliver globally efficient outcomes.

download in pdf format
   (289 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w7293

Published: Bagwell, Kyle and Robert W. Staiger. "Domestic Policies, National Sovereignty, And International Economic Institutions," Quarterly Journal of Economics, 2001, v116(2,May), 519-562. citation courtesy of

Users who downloaded this paper also downloaded* these:
Bagwell and Staiger w10249 National Sovereignty in an Interdependent World
Dow, Holmes, Philipson, and Sala-i-Martin w5216 Disease Complementarities and the Evaluation of Public Health Interventions
Bagwell and Staiger w6049 An Economic Theory of GATT
Bagwell and Staiger w12727 What Do Trade Negotiators Negotiate About? Empirical Evidence from the World Trade Organization
Bagwell and Staiger w6604 The Simple Economics of Labor Standards and the GATT
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us