Research On WTO Trade Policy Review Mechanism

Trade Policy Review Mechanism (TPRM), Trade Negotiation Mechanism and Dispute Settlement Mechanism (DSM) are three mechanisms that ensure the smoother operation of WTO multilateral trading system. TPRM is not only the transparency mechanism, but also the surveillance mechanism of WTO. Compared with studies on DSM, studies on TPRM have been neglected. Reasons may be: DSM is "hard" surveillance that is legal constraints, while TPRM is just "soft" surveillance that is not legal constraints. Actually, TPRM is unique in supervising: Compared with "hard" surveillance, "soft" surveillance is easy to be accepted by the WTO members; TPRM surveillance is general, whereas DSM surveillance is occasional. For the more, as the external constraints of trade policy-making procedure, TPRM not only affects the domestic procedure, but also affects the international procedure. The effect on trade policies of TPRM is also unique. Therefore, the research on TPRM is very significant both in theory and in reality.Different from the lawful point of view of current TPRM studies, this thesis studies TPRM from the viewpoints of Economics and International Political Economics. From the later points of view, the core problem of TPRM research is the effect on trade policies, which depends on the knowledge of TPRM operation mechanism. The effect on trade policies and TPRM operation mechanism are both based on that TPRM should exist continuously. From the viewpoints of Economics and International Political Economics, TPRM research should include such questions as the emerging reasons, the operation mechanism and the effect on trade policies of TPRM. Studies on these questions are the main contents of this thesis.The thesis gives the emerging reasons of TPRM from the aspects of institutional demand and supply. The institutional demand can be analyzed from the viewpoints of International Political Economics and New Institutional Economics. From the former viewpoint, protective trade policies emerge in a certain country because of the function of interest group, which in turn reduce other countries' welfare. Trade agreement is needed to avoid trade wars between these countries, and TPRM is needed to ensure that trade agreement can be enforced. From the latter viewpoint, since proper institutions can reduce the transaction costs, TPRM, as an international institution, can reduce both the endogenous and exogenous transaction costs, which means TPRM is needed. Finally, the supply procedure of TPRM is analyzed by using"Smart Pig" game model and international institution supply model.The thesis goes on to analyze the operation mechanism from two points: the transparency mechanism and the surveillance mechanism. By establishing the international information sharing system, TPRM makes WTO multilateral trading system more transparent. The thesis also uses a dynamic game model to analyze the emergence and the enforcement of WTO agreement, as well as how TPRM supervises the enforcement of WTO agreement.Both the transparent and the surveillance functions of TPRM are embodied on the effect on trade policies of WTO members. Therefore, the thesis finally analyzes the effect on trade policies. Using the two-level game model on international political negotiations, this thesis establishes a two-level game method to analyze this effect. Being the institutional constraints of this two-level game, TPRM affects both the domestic and international levels. The effect on domestic level is weak, but the adjustment on trade policies is voluntary. While on the other hand, although the effect on international level is strong, the adjustment on trade policies must be based on the trade-off of cost and benefit. The TPRM reviews for American and Chinese trade policies have implied that the effect on trade policies is not ideal.The effect on trade policies of TPRM is developed through its transparency and surveillance functions. Therefore, reinforcing the transparency and surveillance mechanism can strengthen this effect. This indicates the future directions for TPRM: reinforcing the domestic transparency function, and the cooperation with Dispute Settlement Mechanism. Obviously, this is a long way to go.