United we stand and divided we fall: Coalitions in the GATT/WTO negotiations
| Author | Gabriel Cepaluni,Ivan Filipe Fernandes |
| DOI | http://doi.org/10.1177/0192512120940738 |
| Published date | 01 September 2022 |
| Date | 01 September 2022 |
| Subject Matter | Original Research Articles |
https://doi.org/10.1177/0192512120940738
International Political Science Review
2022, Vol. 43(4) 547 –563
© The Author(s) 2020
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DOI: 10.1177/0192512120940738
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United we stand and divided
we fall: Coalitions in the
GATT/WTO negotiations
Gabriel Cepaluni
São Paulo State University, Brazil
Ivan Filipe Fernandes
Federal University of ABC, Brazil
Abstract
Coalition formation is considered an important tool to leverage bargaining power in GATT/WTO
negotiations. While most of the literature has focused on developing countries, we show that sizable
economies are the primary users of coalitions at the GATT/WTO. We also find evidence that middle
powers do not exhibit distinctive collectivist behavior at the WTO. There is a linear and strong relationship
between countries’ economic power—measured as real GDP—and coalition participation within the
GATT/WTO system. We explain these results, presenting evidence that large economies—countries that
have greater trade negotiations power—join coalitions more often because they are better equipped to
absorb transaction costs and more prepared to deal with the uncertainty of WTO negotiations. We also
found a relationship between coalition entry and trade openness, with countries more open to trade joining
coalitions more often.
Keywords
World Trade Organization, trade coalitions, economic power, international trade negotiations, democracy
Introduction
Our primary goal here is to understand why countries join coalitions in the General Agreement on
Tariffs and Trade (GATT) and the World Trade Organization (WTO). Then, we show that coali-
tions are part of the bargaining strategy of the most powerful countries in the GATT/WTO and that
there is a strong relationship between countries' economic power and coalition participation within
Corresponding author:
Gabriel Cepaluni, Department of International Relations, São Paulo State University, Avenida Eufrásia Monteiro
Petráglia, Franca, SP 14409160, Brazil.
Email: gabi.cepal@gmail.com
940738IPS0010.1177/0192512120940738International Political Science ReviewCepaluni and Fernandes
research-article2020
Original Research Article
548 International Political Science Review 43(4)
the GATT/WTO system. Therefore, although coalitions are a vital tool for weak countries to
increase their bargaining power, countries that have higher trade bargaining power are better
equipped to absorb transaction costs and more prepared to deal with the uncertainty of the WTO
negotiations.
Coalitions are a much-researched field in international political economy, yet the literature on
coalitions in the GATT/WTO is still scarce. Besides, most of the previous studies have only ana-
lyzed a few cases of bargaining coalitions (Hamilton and Whalley, 1989; Higgott and Cooper,
1990; Narlikar, 2003; Narlikar and Tussie, 2004). There is a consensus that coalitions are one of the
few instruments available to weak countries to increase their bargaining power (Braithwaite, 2004;
Drahos, 2003; Narlikar, 2003). Hence, the formation of coalitions is a valuable tool to leverage
bargaining power, and weaker countries are those most in need of forming coalitions (Keohane,
1969: 295). As Narlikar points out: “United we stand, divided we fall. The reasoning of the weak
in their dealings with the strong is simple and direct” (Narlikar, 2003: 2).
Narlikar’s (2003) seminal contribution has two main concerns: (a) to understand coalition for-
mation, and (b) their strategies to reach their goals. Studies of coalition formation matter because
the pooling of bargaining resources allows greater negotiating weight and may influence policy
outcomes. However, Narlikar is less concerned with the rationale that leads countries to form or
opt to participate in coalitions. She assumes that weak countries need to unite to have their demands
met in the negotiations, while strong states do not need to perform costly intra-coalition bargaining
to get their views taken into account (Narlikar, 2003: 2). Our work about what drives countries to
join coalitions complements Narlikar’s research.
Arguably, there is a relationship between the size of countries’ economies and their participation
in bargaining coalitions. Unfortunately, there is no consensus on the direction of the effect (positive
or negative) or even about the functional form of this relationship (e.g., linear or inverted U-shaped)
(Drahos, 2003; Higgott and Cooper, 1990).
While the literature focuses on developing countries, our article shows that coalition forma-
tion is a strategy used mainly by powerful economies. First, we argue that the powerful coun-
tries—those with higher real GDP—have more interest in building coalitions since they have
more interests in different areas of trade negotiations. Second, to negotiate either in coalitions
or bilaterally is highly expensive. There is a large set of transaction costs that, together with
uncertainty about the final results of the bargaining process, raise insurmountable barriers to
weaker countries. Specifically, high transaction costs and uncertainty over outcomes promote
greater participation of the relatively powerful economies more capable of paying for coalition
formation costs and taking risks. Uncertainty is a characteristic of negotiations, both bilateral
and in coalitions. Smaller economies do not have the resources to deal with uncertainties over
the outcome of high-cost international negotiations. The problem is not that coalitions are a
worse strategy for small economies, but that even a potentially less costly strategy is expen-
sive for them. Some smaller members could benefit from coalition formation, but they are
incapable of negotiating collectively. Additionally, we argue that the increasing costs of nego-
tiating in the WTO outweighs the potentially decreased costs of bargaining coalitions. Hence,
although coalitions are essential for weaker countries, powerful nations take advantage of
coalitions more often.
Our article shows that smaller economies join fewer coalitions, middle powers cooperate
more, and big economies participate the most. Other findings are that countries more open to
trade participate more in coalitions and democracies do not join coalitions more than dictator-
ships. Additionally, large and complex economies form coalitions more often because they are
better equipped to absorb transaction costs and to deal with the uncertainties of trade
negotiations.
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