PECN 600-2

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.

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]


Destler, I.M. and Peter Balint (1999). The New Politics of American Trade: Trade Labor and the Environment. Washington, DC: IIE. [Destler/Balint]


Irwin, Douglas (2002). Free Trade Under Fire. Princeton: PUP. [Irwin]


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.

Evaluation: This course is a seminar. That means active participation from all students in every class. So that you will be able to discuss the issues and the readings, every member of the seminar is responsible for having read all of the required material by the class in which it is to be discussed. There is a substantial amount of reading, so it is essential that you keep current with the reading. In addition to class participation, your performance in this course will be evaluated on the basis of: 4 reaction papers (worth 25 points each); 1 research paper (worth 100 points each); and 1 cumulative final examination (100 points). 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.

Policy on examinations. The final examination will only be given on the scheduled date: (there will be no exceptions so do not make travel plans that conflict with this).

With regard to the short papers. The short papers will be reaction papers. A reaction paper is a short (i.e. 3-5 page) paper discussing some aspect of the relevant debate. In the reaction paper you must explicitly discuss all of the readings for that topic and evaluate some aspect of their discussion. Note: “evaluate” does not mean “agree or disagree with” but, rather, means identify the source of some disagreement between authors, explain why you think the disagreement is interesting/important, and explain why (given the arguments and evidence developed in the readings) one of the positions dominates the other. The reaction papers are due in class on the date we discuss the readings, late papers will not be accepted and will earn a grade of zero.

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 22 January 2003. 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 (23 April 2003). 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 600                              SYLLABUS                                   Spring 2003

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


● 8 January, Course Introduction: Dealing with Interdependence


■ Jackson, Chapter 1

■ Hoekman/Kostecki, Chapter 1

■ Irwin, Chapter 1


● 15 January, WTO as an Institution and a Regime


■ Jackson, Chapters 2 and 3

■ Hoekman/Kostecki, Chapter 2

■ Irwin, Chapter 2

Topic II. Implementing Interdependence Norms


● 22 January, Dispute Resolution in the WTO


■ Jackson, Chapter 4

■ Hoekman/Kostecki, 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. [ERes]


● 29 January, Liberalization and Non-Discrimination


■ Hoekman/Kostecki, Chapter 5 (except section 5.4)

■ Jackson, Chapters 5, 6, and 8


● 5 February, 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. [ERes]


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

Topic III. Implementing National Sovereignty Norms


12 February, Safeguards


■ Jackson, Chapter 7

■ Hoekman/Kostecki, Chapter 9 (except sections 9.4 and 9.5)


● 19 February, Regional Integration and Plurilateral Agreements


■ Hoekman/Kostecki, Chapters 10 and 11

Topic IV. Making and Implementing Trade Law in the US


26 February, 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. [ERes]


■ 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.


■ Destler and Balint. Chapters 1-4.


■ Irwin, Chapter 5


● 12 March, Sales and Less-than-Fair-Value


■ Jackson, Chapter 10 and 11

■ Hoekman and Kostecki, section 9.4, 5.4 and 9.5 (pp. 315-335)

■ Willig, in BTF

■ Shin, in BTF

■ Irwin, in BTF

■ Boltuck and Kaplan, in BTF


● 19 March, Antidumping in Comparative Perspective


■ Irwin, Chapter 4

■ Dutz, in BTF

■ Bourgeois and Messerlin, in BTF

■ Messerlin and Noguchi, in BTF

Topic V. The Future of Global Governance for Trade


● 26 March, Extending WTO Disciplines, 1: New Areas


■ Jackson, Chapter 12

■ Hoekman/Kostecki, Chapters 6, 7, 8


● 2 April, Developing Countries in the WTO


■ Jackson, Chapter 13

■ Hoekman/Kostecki, Chapter 12


● 9 April, Extending WTO Disciplines, 2: Trade and...


■ Irwin, Chapter 3 and 4

■ Destler and Balint, Chapter 5


● 16 April, Antitrust in a Global Environment


■ Sykes, in BTF

■ Destler, in BTF

■ Janow, in BTF

■ Hoekman, in BTF

■ Richardson, in BTF


● 23 April, Constitutional Issues in Global Trade Governance


■ Hoekman/Kostecki, Chapters 13-15

■ Jackson, Chapter 14

Final Examination:.