New Deals “The Second After Leaving?” IO Withdrawal and Bilateral Trade

The Brexit campaign was based on the idea that newly gained British sovereignty and flexibility in global trade governance would facilitate the quick negotiation of preferential trade agreements. We explore how long it may take for a state to negotiate bilateral preferential trade agreements to offset potential losses from International Organizations withdrawals. We address the question of “timing,” and discuss several mechanisms that delay or speed up the implementation of bilateral trade deals after exiting International Organizations. The empirical findings are based on quantitative data and models accounting for the likely simultaneous relationship between International Organizations exits and preferential trade agreements’ formation. We show that leaving economic organisations significantly lowers the likelihood of subsequent preferential trade agreements ratification. This effect wears out after about one year. This research has crucial implications for our understanding of International Organizations, state benefits’ stemming from their membership therein, bilateral trade deals, and international cooperation.