unctad.org | Countries that trade together, vote together
Countries that trade together, vote together
09 January 2019
Blog
Written by
Maria Sokolova, International Economics Consultant at UNCTAD


Could trade deals help make countries so like-minded that they vote together in the United Nations?

Detailed country analysis of commercial ties and behavior in the UN General Assembly suggests there is evidence of such spillover – the convergence of trade interests influencing the political decisions at the United Nations.

Trade has been under fire for decades, and in recent years many policy makers got used to rolling their eyes when they hear another attack on trade rules. At the same time, things on the international foreign policy scene have become much more up in the air and subject to quite unexpected changes in political moods.

UN vote

Our research shows that as trade binds more countries together, there’s a spillover into foreign affairs. Soon the reality may be that the countries that broker deals in trade will have a new – and louder – voice in foreign policy.

Regional Trade Agreements (RTAs) tie countries together via cooperative trading policy. They provide easier, and cheaper, trade rules for the participating countries, and increase exports to non-member states. But RTAs are becoming more comprehensive. In recent decades RTAs have spread in both scale and scope. On the scale front, today, every member of the World Trade Organization (WTO) is part of at least one RTA. When it comes to scope, there is also a vast expansion, with many RTAs including provisions on labour, development, environment and e-commerce, among others, delivering additional development benefits [i].

This RTA intensification has provoked opposing views about policies and positions. Some argue that expansion of scope is a consequence of already relatively liberalized multilateral trade and therefore just an attempt to ensure a fairer distribution of trade gains and more stable institutional environment [ii] [iii] [iv]. Others counter that new issues are a step too far from core trade concerns and “overtake” too many topics [v]. Furthermore, they suggest that this impinges on the sovereignty of smaller partners by limiting their ability to apply national policies.

The reason for these contradictory opinions is rooted in the assumption that trade policy has a limited impact on issues related to human rights, peace and other issues, all seen as core foreign policy concerns. These issues are typically referred to being part of as central or core foreign policy.

Trade cooperation has a subtle impact on UN voting

High foreign policy is discussed in the UN General Assembly (UNGA), one of the main arms of the United Nations. The UNGA is a forum for questions that relate to human survival and development. UNGA voting rules are based on the “one country – one vote” principle, meaning representation is equal for all. Unlike RTAs, which are brokered by negotiations involving partners that are sometimes very unequal.

Because trade policy – of which RTAs are a plurilateral form – is not discussed in the UNGA, it is generally assumed that trade relationships do not impact decisions there. Our research shows that this assumption is too simple, offering evidence that countries that sign RTAs start synchronizing their votes in the UNGA.

For the period of 1990 to 2015, we estimate the spillover of trade policy into UN voting is around 4%. This means that when a typical pair of countries signs an RTA, they register the same vote on 4% of UNGA resolutions. With the average of about 70 resolutions per year voted, this implies that, on average, votes on 2 resolutions will be a “free ride” for negotiators after their countries sign an RTA.

The effect varies by the type of vote (figure 1). Indeed, estimated results are even more striking when we look at the type of vote cast: while “disagree” votes are relatively rare in the UNGA, the RTA partners are 3-5%% more likely to disagree together. The effect on “agree” votes is half the magnitude – 1-2%; while the possibility of having the same “abstain” vote rises by 10%.

This is a first attempt to link trade policy tools – specifically the trend to “regionalize” trade beyond WTO multilateral rules – to political voting. This link between RTAs and UNGA voting is novel for both political scientists and international trade specialists. Its unexpected because trade agreements are not discussed in UNGA, and – apart from some recent issues raised by the UNGA’s Second Committee[vi][vii], which deals with economic and financial issues – it rarely brings up issue of trade, leaving it to the WTO and UNCTAD.

Synchronization is stronger among equal trading partners

Having an RTA affect voting patterns does not imply that the biggest trading partner is imposing its point of view. The amount of trade between the RTA signatories rarely matters, and when its effect is significant, it usually decreases the likelihood of a common position at UNGA. Our results show that RTAs have more of a “synchronizing” effect when they are conducted among more equal and relatively smaller countries.

Unsurprisingly, of course we find that the United States adopts a very strong position in the UNGA – supporting the existing rich case-based literature on that matter. And while the effect in general is more pronounced for countries that sign an RTA within the same region, most of African countries tend to use “abstain” as an alternate vote to “agree”.

 
Figure 1: Average voting pattern in UNGA before and after RTA coming into action, normalized
 
Figure 1
 

Synchronization is higher for deeper forms of RTAs

We document that for any country pair signing any agreement since 1990, such voting synchronization has occurred. However, we wanted to test if the alignment was stronger for different types of agreements.

But RTAs are different, as they range from simple tariff reductions in bilateral trade to actually forming a political union. Using such simple classification, we find that deeper RTAs result in higher synchronization effects than others. The results of this estimation are presented in Figure 2. This implies that the more countries bind their trade policy, the more they develop a common position in the UNGA. In the deepest classification of RTAs – “economic union” – every fourth vote is a “free ride” for negotiators within the RTA bloc.

Conclusion

This research provides a roadmap for assessing how a “targeted” trade policy via regional integration can increase political coherence and stability. Overall, we find that the effect is stronger for countries that have similar GDP per capita, or different GDP per capita but are based in the same region.

Recent years have seen a lot of populist critiques of trade agreements as the Trans-Pacific Partnership (TPP), the North American Free Trade Agreement (NAFTA), or the Transatlantic Trade and Investment Partnership (TTIP). At the same time, the “silent” cooperation of the Association of Southeast Asian Nations

(ASEAN) members has resulted in an improvement of almost all of their major development indicators. ASEAN members have also built up a more common position in the UNGA through a much higher voting alignment.

Our results suggest that in regions where voting alignment is important, RTAs may have important supporting effects. In Africa, for example, as countries develop their new African Continental Free Trade Agreement (AfCFTA), this may promote solidarity in other fora. Our research shows that such forward-looking trade policy on the African continent may pave the way to a much more audible common voice in the high foreign policy sphere.

 
Figure 2: Estimated coefficients on various forms of trade agreements
 
Figure 2
 


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