Economics 497

Law and Economics of International Trade

Professor: Douglas Nelson

Office: Tilton 108 (Murphy Institute), Phone: 865-5317

Office Hours: Tuesday and Thursday, 3:30-5:30

Phone: 865-5317



The purpose of this course is to study the positive law and economics of international trade. That is, we will examine the impact of current international trade law and its implementation in domestic law on the pattern of trade and the distribution of the benefits of trade. We will be particularly interested in the World Trade Organization as an international agreement/ organization, and will focus on administered protection mechanisms as they operate in the United States.

Although this is not a course on the economics of international trade, microeconomic tools will be used extensively in our analysis. Thus, Economics 301 is a prerequisite. While not required, a course on the application of microeconomics to the study of international trade (e.g. Econ 337 or Econ 433) will make your life easier.

Evaluation: Your performance in this course will be evaluated on the basis of 3 examinations (worth 100 points each); and 1 research paper (worth 100 points each). To receive an A, you must earn at least 90 percent of the points available. To pass the course you must earn at least 60 percent of the points available. Grades between these limits will be determined on the basis of your performance relative to that of the class as a whole.

Readings for the course will be drawn from:


Hoekman, Bernard and Michael Kostecki (2001). The Political Economy of the World Trading System : From Gatt to Wto. (2nd Ed.). Cambridge: CUP. [Hoekman/Kostecki]


Jackson, John (1997). World Trading System. (2nd ed.). Cambridge: MIT Press. [Jackson]


R. Baldwin and C. Magee (1999). Explaining Congressional Votes on Recent Trade Bills: From Nafta to Fast-Track. Washington: DC. [Baldwin/Magee]


Barfield, Claude (2001). Free Trade, Sovereignty, Democracy : The Future of the World Trade Organization. Washington, DC: AEI. [Barfield]


Lawrence, Robert, ed. (1998). Brookings Trade Forum–1998. Washington, DC: Brookings. [BTF]


In addition, there are several required readings that can be downloaded from links to the online version of this syllabus:

A couple of useful references: Much of our discussion will have direct reference to theories and results developed by trade economists. A couple of useful references on the economics of trade are:


Stephen Husted and Michael Melvin (2001). International Economics. (5th ed.) New York: Harper and Row. This is an excellent introductory text on international economics. Chapters 2-8 cover the basic economics of international trade and commercial policy.


James Gerber (2002). International Economics (2nd ed.) Reading, Mass.: Addison-Wesley. Another introductory textbook with a greater emphasis on institutional and policy issues.


Neil Vousden (1990). The Economics of Trade Protection. Cambridge: Cambridge University Press. This is an excellent intermediate level textbook that focuses specifically on the economics of trade policy.

For those who want more detail on the legal aspects of trade regulation, the industry standard is


John Jackson, William Davey, and Alan Sykes (1995). Legal Problems of International Economic Relations. St. Paul, Minn.: West Publishing Co.

Examination format. All three exams will have the following format: about 40% short answer questions and about 60% essays. In general there will be more questions of both types than must be answered, so you will have some choice (though there is often one mandatory question which everyone must answer).

Policy on examinations. The midterm exams will be given on 11 October and 8 November. Unless you have a standard university accepted excuse for missing the exam (e.g. health with standard university form), you must take the exams at their scheduled time. If you miss one of the first two exams there will be a cumulative makeup exam (given during finals week). There will be only one makeup exam. If you miss more than one exam you will still have only 100 points of available credit from the makeup exam. (Note: to be eligible to take a makeup exam you must have a legitimate excuse for having missed the regular exam. That is, this is not an optional approach to the course’s examinations). The final examination will only be given on the scheduled date: 12 December 2002, 1:00pm (there will be no exceptions so do not make travel plans that conflict with this). Exams will be returned in class, and exam answer keys will be available from my webpage.

Research papers. Everyone is required to produce a research paper on some aspect of the law and economics of international trade. These papers must be original work, plagiarism will not be tolerated. Broadly speaking, I expect papers in the 25-35 page range. To ensure that topics are well-established and suitable for the course, I require a proposal due no later than 13 September 2002. Late proposals will result in a 10 point penalty to be assessed on the paper’s final score. Research papers are due at the last regular meeting of the course (6 December 2002). Late papers will not be accepted, and will earn a score of 0 points.

Some Good Advice (At No Extra Charge): First, keep current with the reading. This will allow you to make the most of lecture. Second, ask questions in class. If you read something and it is unclear and then it is unclear during lecture, ask about it. Your classmates will probably thank you. This is one of the few ways, before an exam, that I can gauge how the material is getting across. Third, come see me during my office hours. This is another opportunity to get clarification and help on material about which you are unclear. But don't wait until the last minute, by then it is usually too late.

Economics 497                              SYLLABUS                                        Fall 2002

Topic I. Introduction: The WTO in the Global Political Economy


● 28/30 August, Course Introduction: Dealing with Interdependence


■ Jackson, Chapter 1

■ Hoekman/Kostecki, Chapter 1


● 4/6/9 September, WTO as an Institution and a Regime


■ Jackson, Chapter 2 and 3

■ Hoekman/Kostecki, Chapters 2

■ Barfield, Chapters 1 and 2

Topic II. Implementing Interdependence Norms


● 11/13/16 September, Dispute Resolution in the WTO


■ Jackson, Chapter 4

■ Hoekman/Kostecki, Chapter 3

■ Barfield, Chapter 3


■ Olivier Cadot and Douglas Webber (2002). “Banana Splits: Policy Process, Particularistic Interests, Political Capture, and Money in Transatlantic Trade Politics”. Business and Politics; V.4-#1, pp. 5-39.


● 18/20 September, Trade Negotiations


■ Hoekman/Kostecki, Chapter 4


■ John Odell (2001). “The Seattle Impasse And Its Implications For The World Trade Organization”. In Daniel Kennedy and James Southwick, eds. The Political Economy of International Trade Law. Cambridge: Cambridge University Press, pp. 400-434.


■ Symposium on Doha (2002). Journal of International Economic Law; V.5-#1, pp. 191-219. [Select article 15 for the whole symposium]


● 23/25/27 September, Liberalization and Non-Discrimination


■ Hoekman/Kostecki, Chapter 5

■ Jackson, Chapters 5, 6, and 8

Topic III. Implementing National Sovereignty Norms


30 Sept, 2/4 October, Safeguards


■ Jackson, Chapter 7

■ Hoekman/Kostecki, Chapter 9


● 7/9 October, Regional Integration and Plurilateral Agreements


■ Hoekman/Kostecki, Chapters 10 and 11

Midterm 1: 11 October [sample answers in html or pdf].

Topic IV. Making and Implementing Trade Law in the US


14/16/18 October, Constitutional and Political Basis of US Trade Law


■ D. Nelson (1989). “Domestic Political Preconditions of US Trade Policy: Liberal Structure and Protectionist Dynamics”. Journal of Public Policy; V.9-#1, pp. 83-108.


■ B. Eichengreen and J. Odell (1998). “The United States, the ITO, and the WTO: Exit Options, Agent Slack, and Presidential Leadership.” in A. Krueger, ed. The WTO as an International Organization. Chicago: University of Chicago Press, pp. 181-209.


■ S. Cohen (2000). “The Non-Making of International Economic Policy: The Process in Paralysis, 1996-20??”. The Making of US International Economic Policy (5th Ed.). New York: Praeger.


■Baldwin/Magee, all.


● 21/23/25 October, Sales and Less-than-Fair-Value and Antidumping


■ Jackson, Chapter 10

■ Willig, in BTF

■ Shin, in BTF

■ Irwin, in BTF


● 28/30 October, Antidumping in Comparative Perspective


■ Dutz, in BTF

■ Bourgeois and Messerlin, in BTF

■ Messerlin and Noguchi, in BTF


● 1/4/6 November, Export Subsidies and Countervailing Duties


■ Jackson, Chapter 11

Midterm 2: 8 November [sample answers in html or pdf].

Topic V. The Future of Global Governance for Trade


● 11/13/15 November, Antitrust in a Global Environment


■ Janow, in BTF

■ Hoekman, in BTF

■ Richardson, in BTF

■ Destler, in BTF


● 18/20/22 November, Extending WTO Disciplines: Trade and...


■ Hoekman/Kostecki, Chapters 6, 7, 8

■ Jackson, Chapter 12


● 25 November, Developing Countries in the WTO


■ Jackson, Chapter 13

■ Hoekman/Kostecki, Chapter 12


● 2/4/6 December, Constitutional Issues in Global Trade Governance


■ Hoekman/Kostecki, Chapters 13-15

■ Jackson, Chapter 14

■ Barfield, Chapters 4-6

Final Examination: 12 December 2002, 1:00pm.