A BIT IS BETTER THAN A LOT Bilateral Investment Treaties and Preferential Trade Agreements

T landscape of the global economy is increasingly dotted with institutions that regulate investment and trade. The number of bilateral investment treaties (BITs) and preferential trade agreements (PTAs) stand out in this regard, with nearly every country a member of at least one of these institutions, if not many. Yet, for all the scholarly attention paid to investment treaties and trade agreements, the relationship between BITs and PTAs remains little understood. We seek to fill in this important gap in the literature, focusing specifically on whether investment treaties with rich governments help poor ones conclude North-South trade agreements.1 Our argument is in two parts. First, we conjecture that a BIT between a developed country and a developing one increases the odds that they will subsequently sign a PTA. Second, we further conjecture that this pair of states is less likely to negotiate a PTA if the developing country has many investment treaties or trade agreements with other wealthy states. In other words, we predict a curvilinear relationship between BITs and North-South PTAs, in that having too many of these institutional memberships is likely to decrease the odds of signing another trade agreement. In this sense, a BIT is better than a lot.