Strategic Trade Controls as Trade-Enabling Institutions

Do Strategic Trade Controls (STCs) restrict trade, or can they help countries participate in the trade of sensitive goods? Despite obligations under UN Security Council Resolution 1540, more than one hundred countries have not adopted comprehensive systems for controlling dual-use exports. Concerns that these regulations may impede trade and economic growth help explain this gap. We develop a new dataset recording STC enactment and adoption across all 193 UN member states and combine it with CEPII-BACI bilateral trade data for 170 countries from 1995 to 2023. We find no evidence that adopting an STC system systematically reduces strategic trade values. Instead, the clearest positive pattern appears when both trading partners maintain STC systems. The results for countries acting without a similarly regulated trading partner are less consistent, particularly after accounting for their existing trade relationships. These findings challenge the view that STCs function primarily as trade barriers. Under the right conditions, compatible regulatory systems may help countries participate in global supply chains involving strategic and dual-use goods.