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ECPR Futures Lab 2020

Hubs of Governance: Higher-order Effects of PTA-Formation

Mark Manger
University of Toronto
Soo Yeon Kim
National University of Singapore
Mark Manger
University of Toronto

In this paper, we focus on the “hubs of governance”, created by differences in commitments to liberalize trade services as encoded in regional trade agreements (RTAs). Areas such as services are representative of behind-the-border rules, i.e., domestic rules and regulations on which countries must find agreement to manage their trade relations, which are then written into RTAs. We distinguish between a positive-list and a negative-list approach to the scheduling of liberalization commitments and analyze RTAs signed by countries of the Asia-Pacific. We analyze the networks created by these institutional choices and examine whether particular “modes of governance” diffuse through the growing network of trade agreement with the adoption of rules by third parties in their own RTAs. We derive hypotheses that capture the path-dependent effect of choosing a positive-list or negative-list approach to liberalization in trade in services. The empirical analysis tests them using simulation-based dynamic network analysis methods. Our approach is novel in that diffusion does not occur from actor to actor, but from dyadic tie to dyadic tie, and in that we explicitly model higher-order effects such as the diffusion through network ties that traditional statistical models cannot capture. We find evidence of both economic and political driving forces of the selective adoption of different mode of governance, and of a strong path-dependency created by initial choices of liberalization approach.
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