Democratic Politics and International Trade Negotiations

Elections affect both the probability of successful ratification and the terms of international trade agreements; domestic politics in its simplest form shapes international negotiations. Without elections, the extent of protection in a trade agreement increases with the degree of divided government, and the Schelling conjecture—whereby an international negotiator can point to a hawkish legislature to extract greater concessions from the foreign country—holds only when the legislature is not too hawkish. An election (where the executive anticipates the preferences of the legislature imperfectly) implies that when divisions in government rise, the probability of ratification failure increases, the expected outcome becomes more protectionist, and the executive's influence vis-à-vis the foreign country declines, thus challenging the Schelling conjecture.