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When Countries Leave Trade Agreements: A Survey of Cases 1949–2019

Author(s)

Brian Daigle, Samantha DeCarlo, Gregory LaRocca


Abstract

The proliferation of bilateral and plurilateral trade agreements has been discussed extensively in academic literature, where the primary focus has been on the economic impact of the resulting reduction of trade barriers. However, few resources offer an aggregated discussion of situations in which countries opt to suspend or end their participation in trade agreements, or are suspended from them. With the United Kingdom’s recent decision to leave the European Union, the withdrawal of countries from trade agreements has taken on increasing interest. To begin this discussion, this paper outlines over 150 instances of a country or group of countries leaving, being suspended from, or ending a trade agreement. Using data principally from the World Trade Organization and the Design of Trade Agreements Project, and ranging in time from 1950 (when China withdrew from the General Agreement on Tariffs and Trade) to 2019, the authors have found 163 instances of suspension or cancellation of trade agreement participation. This paper explores two trends noted in these cases: (1) the high number of countries dropping participation in agreements in favor of pursuing “replacements”—deeper bilateral trading relationships, or trading relationships with more partners (82 percent of cases, confirming the literature that finds a global trend towards trade liberalization); and (2) the rise in the number of countries that have ended or suspended their participation in agreements without a subsequent replacement (about 18 percent of cases). Six case studies in this paper illustrate the geographic and situational diversity of countries’ suspension or withdrawal from trade agreements.