Kim, Moonhawk. (2012) Ex Ante Due Diligence: Formation of PTAs and Protection of Labor Rights. International Studies Quarterly, doi: 10.1111/j.1468‐2478.2012.00758.x © 2012 International Studies Association Do fair trade PTAs—trade agreements that contain provisions for protection of labor rights—lead to improvements in labor protection in PTA partner states? If so, how do the PTAs bring about such improvements? I argue that trade partner states are likely to engage in ex ante due diligence and improve the protection of labor rights at home before they sign or even enter into negotiations for a PTA. Given that large developed economies have increasingly placed value on strong labor protection, trade partners of these economies act on the belief that, holding other factors constant, having stronger labor protection will increase their attractiveness as a potential or a prospective PTA partner. I test this argument in the context of the United States and its trade partners between 1982 and 2005. The evidence shows that trade partner states indeed are much more likely to improve labor protection (i) prior to the 2002 Trade Act publicizing the importance of labor protection and (ii) prior to signing a PTA with the United States.
Increasing legalization of international institutions has divergent effects on member countries. Whereas legalization decreases uncertainty and increases convergence of countries’ expectations on international outcomes, it imposes costs on countries by increasing the complexity and difficulty of procedures for them to utilize. Countries with the administrative capacity to follow elaborate procedures reap the benefits of increased legalization. For countries without such capacity—primarily developing countries—the potential benefits are offset by their difficulty in following the procedures. I examine this argument against the institutional changes in dispute settlement procedures that occurred in the transition from the General Agreement on Tariffs and Trade (GATT) to the World Trade Organization (WTO). Compared to the GATT era, developed countries—ones with greater capacity—are much more likely to utilize dispute settlement in the WTO than developing countries. Gains from the institutional changes in dispute settlement procedures have accrued to benefit mostly developed member countries in the WTO.
Does language choice attract foreign direct investment (FDI), and if so, how? We argue that language-a dynamic instrument for reducing transaction costs-can influence investors' decision to allocate capital. Potential host countries attract investments by coordinating their domestic language policies-especially those in education-to match the language of the potential FDI investor. We subject our argument to three different tests: (i) a cross-sectional sample of all global Organization for Economic Co-operation and Development investments that employs a newly constructed language-ineducation measurement; (ii) a newly assembled time-series cross-sectional data set of all Chinese FDI abroad; and (iii) a detailed case study that uses process tracing to explain Chinese FDI in Indonesia. The results from these tests demonstrate a significant and robust relationship between language and FDI.Although Spain once colonized the Philippines, Spanish has "largely vanished from everyday use" throughout the archipelago (Inquirer 2010). Yet in February 2010, Spain and the Philippines signed an agreement for Spain to help reincorporate the Spanish language into the Filipino education curriculum and make this language available on a large scale. Not coincidentally, this agreement came 2 months before Spanish business executives visited Manila to "explore investment ventures" (Philippines Department of Trade and Industry 2010). This pattern of language policy changes preceding foreign investment decisions did not happen only in the Philippines. A number of other countries actively adopted language policies in hopes of attracting foreign capital. In this article, we ask: Does language attract foreign direct investment (FDI), and if so, how?Our theory builds on an economic argument about transaction costs. Potential receiver-states attract FDI by decreasing transaction costs for foreign investments. We argue that language policies-specifically language-in-education ones-are instrumental to achieve this objective. Potential receiver-states strategically choose to teach the official language of an FDI sender-state. FDI from the sender-state can increase as a result of this policy change. Scholars recognize the international economic effect of sharing a common language. In fact, language is featured prominently in FDI models (B enassy-Qu er e, Coupet, and Mayer 2007;Leblang 2010). Often, the variable measures whether two countries share a common official language using data from Centre d'Etudes Prosepctives et d'Informations Internationales (CEPII).We have three concerns with the CEPII measure. First, if language is an instrument to reduce transaction costs, then we cannot focus solely on whether two countries share an official language. Doing so ignores the large set Moonhawk Kim is an assistant professor of political science at the University of Colorado Boulder. His research examines the evolution and the consequences of the international trading system in terms of both the multilateral institution of the GATT/WTO and preferential t...
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