Preferential trade agreements and interstate conflict: Disentangling their institutional effects on peace

The long-standing liberal hypothesis that an increase in trade ties contributes to the promotion of interstate peace is repeatedly supported by much research. I question this finding by arguing that the pacifying effects scholars associate with economic integration are driven by institutional structures within agreements created to guide trade. I investigate the security implications of institutional features of preferential trade agreements (PTAs), namely nesting security cooperation and establishing joint bodies, that can mitigate two underlying catalysts for conflict: uncertainty through the exchange of credible information and commitment problems through constructive communication. Utilizing recent empirical advancements in PTA studies and addressing the selection issue in previous research by employing matching techniques, I examine the institutional variation in trade agreements and tease out their heterogeneous effects on interstate conflict. I find supporting evidence that both institutional structures of security cooperation and joint bodies significantly reduce the likelihood of conflict onset within politically relevant dyads, while the pacifying effects of economic integration dissipate when accounting for relevant institutional structures in PTAs.