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The increasing number and expansion of trading blocs is an important dimension of the contemporary international economy. This study examines the effects of such trading blocs on third parties and on the multilateral trading system. It is argued that trading blocs have negative economic effects on economic sectors in non-members’ states. These sectors urge their governments to take political action vis-à-vis the trading bloc. Governments have several policy choices on their menu, and the attractiveness of these policies is determined by domestic and international incentives and constraints. I argue that filing a complaint in the GATT/WTO is an attractive and effective policy tool in the hands of third parties’ governments. Thus, I hypothesize that the existence, deepening, and widening of trading blocs result in an increase in the number of complaints filed against their members in the multilateral trading system. I examine these propositions in the context of three important trading blocs namely, the EU, NAFTA, and MercosurFinthe period 1948–2000. To test these hypotheses a time-series crosssectioncount model is performed. Controlling for conventional alternative explanations, the empirical analysis supports the theoretical framework.

Since the early 1990s regional trading blocs have become a prominent feature of the international economy. While existing regional initiatives, such as the European Union (EU), have deepened their levels of integration, new regional economic arrangements have mushroomed in the Americas, Asia, and Africa. Today, most industrialized and less developed states in the world are members of at least one trading bloc, and more than one third of world trade takes place within such agreements. These developments raise the issue of the effects of such trading bloc son third parties, 1 and by extension on the multilateral trading system as a whole. At the same time, the successful conclusion of the Uruguay Round greatly enhanced the importance of the General Agreement on Tariff and Trade (GATT) and its successor, the World Trade Organization (WTO). Growing membership and coverage of new issue-areas have rendered the WTO as the backbone of the multilateral trading system. At the heart of the GATT/WTO institutions is the dispute settlement system. As a result of Uruguay Round reforms, this system isnowFaccording to some observers the central feature of the new WTOinstitution (Jackson, 1998:162).

This study seeks to examine the nexus between these two central developments in the current international economic system. In particular, it examines the effects of trading blocs on the number of complaints filed in the GATT/WTO dispute settlement system. In doing so, it first explores the economic effects of trading bloc son third parties’ economies, and the political response of economic sectors and governments in third parties to these effects.

References
BAGWELL, K., AND R. W. STAIGER (1997) Multilateral Tariff Cooperation during the Formation of Customs Unions. Journal of International Economics 42:91–112.
BALASSA, B. (1961) the Theory of Economic Integration. Homewood, IL: Richard D. Irwin.
BALDWIN, R. (1999) ‘‘A Domino Theory of Regionalism.’’ In Trading Blocs: Alternative Approaches to Analyzing Preferential Trade Agreements, edited by J. Bhagwati, P. Krishna, and A. Panagariya, pp.
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