means that interests of large states, those that can aVect world prices, continue to
be powerful in bargaining within the GATT/WTO, the fact that small states are
engaged in various ways in each negotiating round, and have to approve theWnal
agreement, could give rise to more respect for their interests. On the question of
liberalization, one advantage of multilateral, structured negotiations is that they
enhance the scope for mutually-beneWcial deals, compared to bilateral bargaining.
These institutionalist hypotheses have been subjected to empirical investigation.
On the outcomes of bargaining, Richard Steinberg ( 2002 )Wnds that the GATT/
WTO structure has not demonstrably promoted the interests of developing
countries. He argues that each bargaining round begins with a law-based process
designed to give account to all participants’ interests. However, the conclusion of a
round involves tough deal-cutting, and has generally been dominated by powerful
states. Thus, the United States and European Union (EU) have dominated the
agenda, in spite of the attempt to use rules to craft a more equitable consensus. In
contrast, Christina Davis ( 2003 )Wnds substantial support for the proposition that
multilateral bargaining leads to greater liberalization than a bilateral setting.
Concentrating on one of the toughest trade issues, agriculture, she demonstrates
that trade conXict between the United States and EU or Japan is resolved in a
manner that promotes liberalization when bargaining takes place in a multilateral
setting. Davis attributes this outcome to the potential for issue-linkage as well as
legal framing and reputation.
The other major problem to be resolved by a global trade organization is to
assure that states will uphold the agreements they reach. On the one hand,
information must be widely available about whether states are living up to the
terms of their commitments. Here, institutions face a relatively easy challenge,
because many private (and public) actors are highly motivated to monitor what
other governments are doing. If an exporter isWnding it more diYcult than
expected to sell to a particular country or is losing market share, this actor
has high incentives to discover any violations of international agreements by
competitors. In addition, the structure of punishment procedures creates incen-
tives for producers for the domestic market to uncover violations as well. If another
country is found to have violated a commitment, the type of punishment approved
by the WTO is to impose some kind of countervailing duty; that is, to increase
tariVs on imports from that country in retaliation. Since domestic producers will
beneWt from such retaliation, they have an interest in monitoring other states’
compliance with trade accords. Thus, the rather ingenious but simple punishment
scheme typically used in trade agreements facilitates ‘‘Wre-alarm’’ monitoring
mechanisms; little direct oversight by the organization itself would appear neces-
sary (McCubbins and Schwartz 1984 ). However, governments have become adept
at non-obvious forms of protection, such as obscure product-standard regulations.
Not surprisingly, we see that as the GATT/WTO has developed over time, it
has gained enhanced monitoring capacities, now undertaking regular systematic
662 lisa l. martin