terms. 2 The structure of GATT/WTO is thus designed to promote liberalization—
reduction in barriers to exchange—while maintaining existing terms of trade. This
principle explains why norms such as non-discrimination and reciprocity are so
important in trade institutions, and why they go hand-in-hand. Reciprocity assures
that any agreements reached will maintain existing terms of trade, as reduced
protection in one state must be matched by similar ‘‘concessions’’ by others.
Non-discrimination means that any liberalizing measures need to be extended to
all trading partners, most famously through the ‘‘most-favored-nation’’ principle.
Reciprocity without non-discrimination would lead to an extremely complex set of
bilateral deals and allow opportunities to undermine agreements’ intent through
shifting the location of production and other mechanisms. The GATT/WTO also
structures bargaining so that the major producers and consumers for various goods
are given a primary role in reaching deals. While this somewhat exclusionary
process is often protested by smaller states, without it the necessary deals that
preserve terms of trade could never be reached.
Another aspect of the bargaining process is how it can be structured so as to
encourage liberalization. One element of this process is to assure that the process
encourages exporters—the most immediate beneWciaries of liberal trade—to mo-
bilize and exert pressure on governments to reach deals. The GATT/WTO structure
assures that exporters have incentives to mobilize, by making clear the beneWts that
will accrue to them; again, the norm of reciprocity plays a large role here (Gilligan
1997 ). In addition, the fact that negotiators reach complex ‘‘package deals’’ that are
subject to an up-or-down vote back home allows them to put together sets of
measures that will meet with political approval. One important question is how
transparent negotiations should be. They are often carried out behind closed doors,
although with suYcient information available that aVected exporters recognize the
potential beneWts on the table. However, Goldstein and Martin ( 2000 ) point out
that too much transparency in the bargaining process could be detrimental to
the process of liberalization, as it could increase the certainty that particular
import-competitors would lose from deals, leading them to mobilize more
extensively.
From an institutional perspective, a major question about bargaining is whether
the institutional structure itself inXuences the outcomes. Compared to unstruc-
tured, ad hoc bargaining, does the GATT/WTO structure lead to outcomes that
protect the interests of smaller states, for example? Does it encourage greater
liberalization? Both could well be true. Although the ‘‘principal suppliers’’ norm
2 The terms of trade are the relative price of imports to exports. A country improves its terms of
trade by increasing the price it gets for its exports, or by paying less for its imports. Obviously, a shift
in these terms will beneWt one side while hurting the other. Thus, as long as trade agreements must be
approved by all parties, they must hold the terms of trade constant, otherwise one side will veto the
agreement.
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