Are NMEs our enemies?: non-market economies and western trade policies

Abstract

Non-market economies (or Communist countries) are subjected to unusually high levels of Western trade protection. Why do non-market economy exports face higher levels of trade protection than other country groups, including other developing countries? Why have patterns of trade protection against non-market economies remained largely unchanged in the post-Cold War period despite several formal trade rule changes designed to facilitate access to U.S. and European markets? Why have the U.S. and European Union improved the fairness and transparency of their trade laws, yet both have failed to apply the changes to actual trade with non-market economies? This dissertation analyzes the trade impediments that former Communist countries face integrating into the international political economy.Traditional international and comparative political economy explanations for trade protection are tested and refuted as explanations for trade discrimination against non-market economies. Instead, a theory of belief stasis and belief change is developed to account for patterns of trade discrimination. Longstanding cognitive beliefs about the country of origin play an important role in explaining patterns of trade protection. Rational beliefs, developed during the Cold War about the particularly threatening nature of trade with non-market economies, continue to affect the application of trade policies.A variable new to economic theories is introduced---belief certainty. This variable explains the dynamic of both belief stasis and belief change. Beliefs function as information discounters, varying in their discounting effects according to the certainty with which they are held. Deriving belief certainty from the trade related institutional incentives faced by a country, this project shows how degree of belief certainty affects decision-making by Western trade agencies. Thinking about beliefs in terms of the certainty with which a belief is held allows for an explanation of both why and how beliefs affect trade policy-making. It provides a consistent explanation for seemingly contradictory trade policies enacted by the West toward non-market economies. The United States and European Union's treatment of non-market economies in the area of anti-dumping trade policy is analyzed in order to provide empirical support for the argument.