The Ties between the World Trade Organization and Preferential Trade Agreements: A Textual Analysis

Abstract

Although many believe preferential trade agreements (PTAs) are incompatible with the World Trade Organization (WTO), we lack empirical evidence on this topic. In this article, we examine international trade agreements—the source of trade law—and employ two types of text analysis to determine the presence of the WTO in PTAs. Our systematic comparisons of post-Uruguay Round PTAs and relevant WTO agreements reveal a strong, two-part presence of the WTO in PTAs. Nearly all recent PTAs reference the WTO explicitly, often dozens of times across multiple chapters. Likewise, in many of these same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement. Moreover, multiple regression analyses reveal that larger countries and those most active in preferential agreement making are actually most likely to include a strong WTO presence in their PTAs. Additionally, the presence of the WTO in PTAs has increased over time. Our study contributes novel and robust empirical evidence to suggest that the ties between the WTO and PTAs are more solid than is realized.