Sanctions-busting and the signing of new preferential trade agreements and bilateral investment treaties
Year: 2019

Why does the imposition of sanctions sometimes encourage the signing of new preferential trade agreements (PTAs) and bilateral investment treaties (BITs) between target states and their trade partners? I develop the theory that “trade plants the flag” and the argument of “chomping at the BIT” to explain how the trade-based and foreign direct investment (FDI)-based sanctions-busting behavior of firms drives their home governments to sign new PTAs and BITs with target states. The notion that “trad